The Importance of Being Honest With Your Lawyer

The title may seem like common sense to everyone, however, there is always that 1 out of 1000 cases who think that they will benefit from withholding information from their bankruptcy lawyer.  The reasons debtors mislead their lawyers are varied.  Many people don’t think it a “big deal” and want to file and think that lawyers are overly cautious.  Or others think that the question the lawyer asked is not exactly on point to their particular situation so they will choose to not disclose the particular fact.    

Failure to disclose information can have disastrous consequences when the client withholds information to their bankruptcy lawyers.  It is a lawyer’s duty to protect a client’s interests and if omissions and misrepresentations are made, a lawyer cannot adequately perform their duty.

In many cases, clients have already consulted with other bankruptcy lawyers before engaging with our firm.  During their other consultations, the lawyers advised them that they would have certain issues as a result of the fact that they shared.  The bankruptcy lawyer may quote a higher fee because of the issue.  Some lawyers may even refuse to take the case.  As such, the client thinks that it would have been better if they simply didn’t share the information.

The most disastrous of omissions is usually related to properties, deeds, and transfers.  Sometimes people will choose to mislead their lawyers on such topics.  Once it is discovered by the bankruptcy trustee, it can ultimately result in the loss of the said property. 

Another fact that is often omitted is the fact that the debtor may have possible claims/lawsuits that they are pursuing or may pursue in the future.  In the past, I have had a client tell me that they didn’t think they had to disclose such information to the bankruptcy court because they had not yet filed a lawsuit in Superior Court despite the fact that we had questioned them about it and they denied it throughout the process. 

Another common misrepresentation relates to the nature of their debt.  What were the loans and credit cards used for?  What happened to the money?  In some cases, clients will give us the run around or just fail to disclose that they gave it to their parents or friends.  

In our law firm, clients are asked multiple times about their assets and transfers.  In a typical Chapter 7 bankruptcy case, a client will be asked at least 4 times about their assets and transfers.  We never rely on their first answer.  Through our filing process a client is asked repeatedly about such matters.  So it would be quite a unique situation for an asset or a transfer to be discovered by the bankruptcy court after a bankruptcy case has been filed.  

Once a bankruptcy case is filed, omissions and misrepresentations can have disastrous consequences for the debtor and even friends and family.  And the bankruptcy lawyer will not be happy about the misrepresentations that were made.  A lawyer questioning their client’s truthfulness and integrity as it relates to attorney-client communication results in a less than productive relationship.  At the end of the day….please answer all questions from your lawyer truthfully and if there is any doubt always disclose it to your lawyer.