TWO TRUSTEES IN SOUTH CAROLINA BANKRUPTCY CASES, WHY?
If you file a bankruptcy case is South Carolina under Chapter 7 or Chapter 13, you will always have a Trustee assigned to oversee your case. This person is called the case Trustee and the duty of the Trustee is to look at your case and see that you have listed all of your assets and liabilities. The Trustee will require that certain information, in addition to that listed in your schedules, be sent to him or her so that this information can be reviewed. Trustees are looking for certain information and and they look for things that cause questions or raise the “red flag” in the mind of the Trustee. The case Trustee has been through a lot of cases and also receives training on things to look for when reviewing schedules. A good example is if you were claiming on a tax return that you received a lot of interest income a year or two before you filed, the Trustee is probably going to want to know where the interest was coming from and what happened to the asset that was causing you receive that income.
You will be required to go to the Meeting of Creditors which is also called the 341 hearing. Title 11 U.S.C. Section 341 the United States Code of Laws requires that all debtors appear at this hearing to answer questions of any creditor or party in interest. The Trustee for your case will also be present and will usually ask most or all of the questions. Trustees have examined many debtors and many times the questions that are asked by the Trustee are sufficient to satisfy any creditor questions. The case Trustee also welcomes information from creditors, ex-wives, ex-partners, upset investors and others who believe that you may not have told about all of your financial dealings.
The Trustee is not your enemy unless you are trying to hide something. If you have provided full and complete information and met with your attorney, you should not have any surprises at the hearing. Too often, however, debtors do not tell their attorneys everything. When that happens, two different results can occur. If the failure to disclose is inadvertent and not as a result of intentional lying, the debtor is usually allowed to fix the failure to provide the information. The debtor will be very uncomfortable at the hearing and try to explain why the information is not in the schedules. The debtor will also be fussed at by the Trustee and amendments must be filed to the schedules by the debtor. The Trustee in your case reports to their boss, known as the United States Trustee, that schedules had to be amended.
When the information is sent by your case Trustee, the information is reviewed by the Office of the United States Trustee. This is a division of the United States Department of Justice, the same department that prosecutes the Mafia, tax fraudsters, bank robbers and other white collar criminals. The job of the Office of the United States Trustee is to oversee the administration of the Bankruptcy System, try to keep everyone honest and to try to improve the image of the Bankruptcy System. There seems to be a perception that it is proper to lie in Bankruptcy Court if the lie is just a little lie. Of course, the definition of what is a little lie is somewhat up to debate. The position of the Bankruptcy Judges and the Office of United States Trustee is that no amount of lying, no matter how little, is acceptable.
Your case Trustee does not make the decision to prosecute you or to let your failure to fully disclose all information in your schedules. The decision is made by the Office of the United States Trustee. The Office of the United States Trustee sees a lot of cases and is able to weigh the likelihood that a mistake is inadvertent by seeing other cases where similar mistakes occur. In the end, the Bankruptcy Judge makes a decision as to whether the debtor gets a discharge or the case is dismissed. The system makes sense as the case Trustee is working on many cases and does not have time to prosecute cases that warrant prosecution. The system is place has made the Bankruptcy Court a much more honest place. I have often heard that it is alright to lie in a bankruptcy case or to not tell the truth about all of your assets.
The job of the United States Trustee is to try and stamp out that attitude. Lie on your schedules in a Charleston, South Carolina bankruptcy case and the Office of the United States Trustee will be happy to stomp on you. Making an example of you to deter others from lying when they file bankruptcy is what they are very willing to do.
When you applied for a loan, bought a car or home, you listed all of your assets. You were trying to impress your lender that you were able to afford to repay the money being borrowed. There are records about the house you inherited in another county or state. Records are available and it is not hard to find information on line about you. Tell your attorney about all of your assets and all liabilities or you may wish that you had. Read your schedules before you sign them and if you find something is missing from your schedules, then make sure that an amendment is filed that adds the missing information.
Before you lie as a part of a bankruptcy, ask yourself this question. Is the item or information that you are not telling your attorney and not putting on your schedules worth being prosecuted for a criminal act, maybe going to jail and losing your right to vote or run for public office. Think about this question before you cause schedules to be filed that are incorrect.
No attorney is going to knowingly lie or allow a debtor to lie on the schedules. Things do, in fact, get overlooked and/or missed. This is not grounds for further action. Talk to an attorney such as Nathan Davis to find out about what you may or may not lose if you file bankruptcy. Most of the time, the assets that you are afraid you would lose are safe using available exemptions and techniques.
The only court system which has a special agency which has as an important part of its mission the catching and punishment of fraud, perjury and misleading information is the Bankruptcy Court System. If you want to lie, not tell the full truth or hide information, you probably should probably choose to do it in a Court other than the Bankruptcy Court. This Court will punish you if it catches you and it catches a lot of people. As an attorney who practices in Beaufort, Charleston, Dorchester, Berkeley and other South Carolina counties, I have seen cases dismissed without debtors obtaining discharges and even seen a few debtors prosecuted for criminal acts committed in Bankruptcy Court.