《楊清泉律師專欄》FALSE STATEMENT MUST BE FRAUDULENT & MATERIAL TO…(PART I)

FALSE STATEMENT MUST BE FRAUDULENT & MATERIAL TO WARRANT DENIAL OF BK DISCHARGE

中文版

Section 727(a)(4)(c) states that the court shall grant the debtor a discharge, unless… “(4) the debtor knowingly and fraudulently, in or connection with the case (A) made a false oath or account…” Not every false statement made by debtor is a ground for denial of discharge. Bankruptcy law requires that a false statement must be “knowingly and fraudulently” made by debtor for a discharge to be denied to debtor. For instance, client’s case was filed a week after he filed his 2010 tax returns which showed a refund of $7,500. Thus, the tax refund of $7,500 became a receivable, an asset of debtor, when his chapter 7 case was filed. However, his chapter 7 petition did not disclose the tax refund. When questioned by the trustee at the 341-a meeting if his petition was accurate, debtor replied that it was. Upon further questioning, debtor testified that he had a tax refund of $7,500. Trustee then said that debtor had testified earlier that his petition was accurate but was in fact not accurate because the refund of $7,500 was not reflected, so trustee demanded that the $7,500 be transferred to him.

Is trustee correct? No, because debtor’s false statement was not “knowingly and fraudulently” made. I cross-examined debtor to elicit the fact that the case had been filed right before he filed his 2010 tax returns and that he was unaware that the tax refund needed to be declared. And I told the trustee that there were enough applicable exemptions to allow debtor to keep the $7,500, therefore there was no intent to defraud the court, and an amendment would be made and filed accordingly.

《楊清泉律師專欄》FALSE STATEMENT MUST BE FRAUDULENT & MATERIAL TO WARRANT DENIAL OF BK DISCHARGE(PART II)