Bankruptcy petitions must be accurate. If they are not accurate, discharge may be denied pursuant to Section 727 (a) (4) which states that a discharge will not be given to a debtor who ‘knowingly and fraudulently, in or in connection with the case- (A) made a false oath or account.’ Case law states further that the omission or misrepresentation must be “material” for discharge to be denied. Thus, the law requires the existence of malice on the part of debtor because the false oath must be “knowingly and fraudulently” made by debtor. What do you think of the following case? In this case, debtor was involved in a car accident which killed another person. Debtor did not disclose this accident in her bankruptcy petition. Decedent’s husband got a $1.0 million wrongful death judgment against debtor on May 24, 2006. Debtor filed for Chapter 7 relief on October 11, 2006, six months after that judgment was obtained. Debtor’s petition disclosed only a mortgage which she reaffirmed. Did it make any difference that a wrongful death claim is not dischargeable? It is arguable that the omission was harmless error because the claim was not dischargeable anyway so disclosing the claim would serve no purpose. Debtor received a discharge on February 16, 2006.

However, during discovery conducted in connection with the trustee’s objection to the debtor’s homestead exemption, it was learned that the debtor actually misrepresented or omitted many material information in her bankruptcy petition, the schedules, the Statement of Financial affairs, and at his testimony at the 341 A creditor’s meeting. Debtor’s misrepresentations and omissions included the following:

1. Checking account balance was actually $8,551, not $387;

2. Schedule I did not disclose that she received alimony of more than $1,000 a month;

3. Schedule mistakenly disclosed monthly income from a trust at $1,083, instead of the correct $4,399;

4. Statement of Financial affairs incorrectly states her 2004 income at $22,500, instead of the correct $71,137;

5. Omission of the fact that debtor directed that distributions from the trust be made in her son’s name.

( to be continued )