What if You Were Less Than Truthful on Your Bankruptcy Forms?

 Posted on August 06, 2025 in Bankruptcy

Filing for bankruptcy in Texas can be a beneficial way to achieve a fresh financial start, but being honest throughout the process is crucial. Bankruptcy paperwork requires full disclosure of your financial history, including assets, debts, and income. If you fudge the numbers or intentionally leave things out, you could face serious consequences, even if the mistakes or omissions were not intentional.

So, what happens if you were less than honest on your Texas bankruptcy forms, or you realize after the fact that you inadvertently filed with inaccurate information? The best course of action is to discuss the issue with your Wise County, TX bankruptcy lawyer. It could be possible for your attorney to file amended schedules to correct any inadvertent errors or to speak to the trustee as a show of good faith.  

What Are Some Common Ways People Are Less Than Truthful in Bankruptcy Filings?

The bankruptcy process is based on transparency and fairness. Filings are made under penalty of perjury, which every bankruptcy filer should take very seriously. Yet, according to a 2021 University of California report, approximately 11.49 percent of bankruptcy filings in 2020 likely involved fraud. The most common ways people seek to "game" the bankruptcy system include:

• Hiding cash
• Hiding vehicles
• Hiding jewelry or artwork
• Underreporting income from self-employment
• Underreporting income from side gigs
• Transferring property to family members or friends before filing
• Omitting financial accounts
• Omitting recent gifts

Most dishonest bankruptcy issues are more likely to be related to big corporations filing for bankruptcy. In 2020, both Hertz and JCPenney filed for bankruptcy. It was later revealed that the executives of both companies received millions of dollars in bonuses before declaring bankruptcy, and some of the debt was transferred to a subsidiary.

What is Considered Bankruptcy Fraud?

Congress defines bankruptcy fraud as intentionally and fraudulently hiding or concealing assets, or filing misleading claims. It can also include making false statements under oath, presenting false claims against the debtor’s estate, receiving and concealing a debtor’s assets, or destroying or falsifying records that relate to the debtor’s assets or financial affairs. Bankruptcy fraud is often discovered in the following ways:

• Trustee investigations
• Creditor objections
• Creditor "tip-offs"
• Reviews of tax returns, real estate records, or bank statements
• Red flags in the means test or schedules

What Are the Potential Consequences of Filing Dishonest Bankruptcy Paperwork?

If it is discovered that an individual deliberately filed paperwork for his or her bankruptcy that was not entirely truthful, the case could be dismissed without discharge. Property that was not disclosed could potentially be lost, even after the bankruptcy case is closed.

The discharge could be revoked, and the court could order the sale of non-exempt assets to repay creditors – even if the discharge is denied. Bankruptcy fraud can damage your credit score even more than bankruptcy itself, making it extremely difficult to obtain credit in the future. Worst of all, bankruptcy fraud is a federal crime, punishable by up to five years in federal prison and a fine of up to $250,000.

What If It Was an Honest Mistake?

A mistake made through an oversight or negligence is not the same thing as deliberate bankruptcy fraud. In most cases, the individual can work with a bankruptcy lawyer to file amended schedules and work with the trustee to correct any mistakes. Timing matters in this situation, and it may be possible to avoid penalties if the corrections are made promptly.

Contact a Parker County, TX Bankruptcy Lawyer

If you have already filed for Texas bankruptcy and you realize your paperwork was not accurate, being proactive and honest now can protect you from serious consequences later. A skilled Arlington, TX bankruptcy attorney from Acker Warren P.C. can help you correct the filing, explain your situation, and potentially save your bankruptcy case in the process.

When you choose Acker Warren P.C., you will always speak to an attorney, as opposed to a paralegal. We can complete your case quickly, in some cases, totally virtually, saving you time and money. Call 817-752-9033 to schedule your free consultation.