Can a bankruptcy case be discharged if before discharge a legal settlement is reached? 22 Answers as of October 04, 2011

A pending lawsuit was not listed on chapter 7 petition and may be awarded before creditors meeting. Should the petition be amended and include the possible pending lawsuit? Should we let the case be dismissed by not filing pay stubs with the court?

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Ashman Law Office
Ashman Law Office | Glen Edward Ashman
You are asking if you should hide perjury in a bankruptcy case. Once you are caught, expect to spend time in federal prison. The omission of a claim is a serious omission. It is an estate asset and the omission can cost you the settlement, as well as put you in prison for 5 years with a $250,000 fine. Discuss this with your lawyer and file an amendment before you get in further trouble from your botched pro se case. You'll probably lose the settlement but keep your freedom.
Answer Applies to: Georgia
Replied: 10/4/2011
Janet A. Lawson Bankruptcy Attorney
Janet A. Lawson Bankruptcy Attorney | Janet Lawson
The law requires you list all of your assets. If you are getting money from this lawsuit the trustee has an interest in it. If it results in a liability, it should have been listed. What you are describing appears to be an abuse if the bankruptcy system. I will not help you with that.
Answer Applies to: California
Replied: 8/1/2011
The Law Office of Marvin Wolf
The Law Office of Marvin Wolf | Marvin Wolf
This is a serious issue. I'm not your lawyer, so here's some information only: Bankruptcy filings require full and honest disclosure of ALL assets and liabilities. People who try to play the system can go to jail. The second someone files, a bankruptcy "estate" is created consisting of all assets of the debtor - whether or not they are listed on the petition. If an asset is left off the petition, the trustee can still go after it and the debtor doesn't even get an exemption in the asset. Trustees know how to do searches of courts for lawsuits. Trustees get a "bonus" for finding hidden assets - it's a treasure hunt and they are good at it. Trustees can oppose dismissal, pursue assets, and make referrals to the Office of the US Trustee, which can report it to the FBI. Given that, what do you think? Do you think you might need to amend your petition to include the asset?
Answer Applies to: New Jersey
Replied: 7/26/2011
Ray Fisher Law Offices
Ray Fisher Law Offices | Ray Fisher
First of all what is a legal settlement, and how is that different from a settlement? Assuming you are talking about a suit that was on file but not listed in the bankruptcy, unless you have listed it and claimed it as exempt with no objection, then the trustee owns it. In that case the trustee is the only one who can settle it, and that with bankruptcy court approval. You can still get your discharge while this is pending. If this suit existed and you did not list it and you fail to do so, then when the trustee finds out about it, you lose any discharge and face criminal prosecution for a number of things including bankruptcy fraud and perjury. The bad news is it is a crime. The good news is that it is federal. Generally federal prisons are much nicer places to spend time than state prisons, and you may get better quality cell mates there. And of course the bottom line is tell your bankruptcy lawyer about the suit, and tell your lawyer in the suit about the bankruptcy. Follow their advice and you will never have to find out if I am right about the superior quality of federal versus state prisons.
Answer Applies to: Texas
Replied: 7/26/2011
The Law Office of Mark J. Markus
The Law Office of Mark J. Markus | Mark Markus
You are required to list all assets on your bankruptcy petition, including any claims (lawsuits) you have against someone else. Failure to do so can result in loss of your discharge and in extreme cases non-dischargeable fines and jail time. You absolutely must amend to add the pending lawsuit regardless of whether you let your case get dismissed or not.
Answer Applies to: California
Replied: 7/26/2011
    Indianapolis Bankruptcy Law Office of Eric C. Lewis
    Indianapolis Bankruptcy Law Office of Eric C. Lewis | Eric Lewis
    You are under a legal obligation to report the pending suit on Schedule B as a potential asset of the bankruptcy estate.
    Answer Applies to: Indiana
    Replied: 7/26/2011
    Florio Law Firm, PLLC
    Florio Law Firm, PLLC | Amber Morgan Florio, Attorney at Law
    I would amend the petition.
    Answer Applies to: Texas
    Replied: 7/25/2011
    Bankruptcy Law office of Bill Rubendall
    Bankruptcy Law office of Bill Rubendall | William M. Rubendall
    All assets must be listed, including possible settlements and lawsuits. If these are assets the trustee may decide to administer them, subject to your exemption rights.
    Answer Applies to: California
    Replied: 7/25/2011
    The Port Law Firm
    The Port Law Firm | Edward Port
    Speak to your lawyer about this, if you filed without a lawyer seek the advice of one. Schedules are allowed to be amended to include non listed creditors. If the lawsuit is a dischargeable debt than it should be added.
    Answer Applies to: Florida
    Replied: 7/25/2011
    Law Office of Maureen O' Malley
    Law Office of Maureen O' Malley | Maureen O'Malley
    Yes, amend. No do not fail to file pay stubs. There is a eay to dismiss a non-asset case which a lawyer can do for you.
    Answer Applies to: Virginia
    Replied: 7/25/2011
    Law Offices of Daniel Moulton
    Law Offices of Daniel Moulton | Daniel Moulton
    A tough question. Too many variables to give a definitive answer. Depends on the settlement amount. You may have an exemption, depending on the type of case that settled. You should amend the bankruptcy right away if you are going to need the discharge at some point. Otherwise, your settlement and/or bankruptcy may be adversely affected if it is discovered that you did not mention the lawsuit in the bankruptcy petition. You must seek advice as soon as possible.
    Answer Applies to: Illinois
    Replied: 7/25/2011
    Guerrieri & Cox
    Guerrieri & Cox | Michael A. Cox
    You absolutely should amend the statement of financial affairs and possibly your schedules regarding the lawsuit. From your question, I cannot tell if you have a claim against someone or if someone has a claim against you. If you have a claim against someone, definitely amend the statement of financial affairs and Schedules B/C immediately to minimize a defense of judicial estoppel. Judicial estoppel prevents recovery on a claim where you have taken a position before the court that you didn't have a claim (by not disclosing it in this case). If the claim is against you, the statement of financial affairs and Schedule D,E, or F needs to be amended depending on whether the creditor has a secured, priority unsecured, or general unsecured claim against you.
    Answer Applies to: Ohio
    Replied: 7/25/2011
    Benson Law Firm
    Benson Law Firm | David Benson
    You should speak with a competent bankruptcy attorney ASAP to see if the settlement amount is clearly exempt. If it is, the schedules should be amended. If the settlement is not exempt, you'll have to look at the numbers to determine whether to stay in the 7, dismiss, or convert to a 13.
    Answer Applies to: Ohio
    Replied: 7/25/2011
    Apple Law Firm PLLC
    Apple Law Firm PLLC | David Goldman
    I am assuming you mean with another case, if so the answer is yes.
    Answer Applies to: Florida
    Replied: 7/25/2011
    Law Offices of Michael J. Berger
    Law Offices of Michael J. Berger | Michael J. Berger
    You should amend your bankruptcy schedules to list all lawsuits that are pending. You do not say if you are the Plaintiff or the Defendant. If you are the Plaintiff, then you should list the lawsuit in Schedule B. If you are the Defendant, you should list the lawsuit in Schedule F. Either way, you should list the lawsuit in the Statement of Affairs. It is never a good idea to "let the case be dismissed by not filing pay stubs with the court." If you have a case in which the Trustee thinks that there are nonexempt assets, he or she may continue the 341(a) hearing and not move to dismiss the case despite your failure to submit paystubs. If you want the court to dismiss your case, you should have your bankruptcy attorney file a Motion to Dismiss. In that motion, you must show why dismissal is in the best interests of your creditors.
    Answer Applies to: California
    Replied: 7/25/2011
    Lake Forest Bankruptcy
    Lake Forest Bankruptcy | Anerio V. Altman, Esq.
    This This is a dangerous area. If you are RECEIVING monies from the lawsuit, this MUST 100% be listed on your petition. Failure to do so is a Federal Crime. If you are being sued, list it and be done with it. Your case may be dismissed for failure to file paystubs with the court. Be very careful about this. You should consult consul.
    Answer Applies to: California
    Replied: 7/25/2011
    Judith A. Runyon, Esq. Attorney at Law
    Judith A. Runyon, Esq. Attorney at Law | Judith A. Runyon
    Amend and add the creditor.
    Answer Applies to: California
    Replied: 7/25/2011
    Law Office of Harry L Styron
    Law Office of Harry L Styron | Harry L Styron
    The lawsuit should have been listed on the petition. To fail to amend to do so is a violation of federal law and may lead to criminal prosecution. You fail to specify whether you are the plaintiff or the defendant, and it makes a difference to the answer. If you were the plaintiff and the lawsuit was filed prior to the petition, the proceeds are exempt from the estate pursuant to California Code of Civil Procedure section 704.140 except to the extent necessary to reimburse any healthcare provider for care provided for the injury which gave rise to the lawsuit. If you are the defendant, then the judgment would be discharged by the bankruptcy.
    Answer Applies to: California
    Replied: 7/25/2011
    Theodore N. Stapleton, PC
    Theodore N. Stapleton, PC | Theodore N. Stapleton
    Yes the petition must be amended immediately. Whether it is dischargeable depends on many things.
    Answer Applies to: Georgia
    Replied: 7/25/2011
    Dan Shay Law
    Dan Shay Law | Daniel Shay
    Yes, definitely amend schedule B and C immediately.
    Answer Applies to: California
    Replied: 7/25/2011
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