When Texas residents or others file for bankruptcy, they generally must disclose all of their assets. One woman who failed to disclose that she had $3,500 of cash on hand had her Chapter 7 discharge blocked. The woman said that she didn't disclose the cash as an asset because she needed it to pay rent and other expenses. After hearing this, the bankruptcy trustee argued that the woman had lied under oath.
Furthermore, the court found that the woman had an understanding of what cash was. By failing to admit that she had $3,500, it was found that the debtor intentionally hindered the ability of creditors to receive payment. A judge from the U.S. Bankruptcy Court for the Central District of Illinois agreed with this assessment. However, the woman's attorney did get some of the blame for failing to make her aware of how serious the action was.
The judge said that the attorney could have handled the matter better, and that if it were handled differently, the case could have ended with another outcome. As a general rule, most debts are discharged under a Chapter 7 plan after assets have been liquidated. Any funds raised are then given to creditors to pay off some or all debt balances.
Filing for Chapter 7 bankruptcy may make it easier for an individual to get relief from a variety of debts. Typically, Chapter 7 makes it possible to get rid of credit card, medical or similar balances while paying little or nothing to creditors. State or federal law may exempt property from being liquidated, which might allow a person to retain equity in a home, a car or other possessions. Typically, items that have little or no value will not be liquidated in a bankruptcy proceeding.