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What Happens When You Don’t List Everything in Your Bankruptcy?

I get a lot of questions surrounding what property and which belongings you have to list in a bankruptcy. The answer? All of them. And no, it’s not so you can give them all up—it is so that the bankruptcy court, the trustee, and I can get a full picture of what your financial situation looks like. Before you think about keeping that little “something” secret because “who is going to know?” you just might want to consider that hiding something from the court can actually be considered bankruptcy fraud, for which you can go to prison. Julie Lynn Wagman, a woman filing chapter 7 bankruptcy, learned this lesson when she hid her jewelry from the court.

According to court records, Wagman filed for Chapter 7 bankruptcy protection on August 31, 2005. She was required to list her assets on the statements and schedules, which are filed under the penalty of perjury. However, she failed to provide accurate information on her Schedule B, Personal Property, concerning her jewelry, which included an $8,000 Rolex watch, a $4,400 tennis bracelet, and a $42,000 diamond wedding ring. The only jewelry she disclosed to the court was a $300 wedding ring, in addition to furs and jewelry valued at $200.

She testified under oath again on September 5, 2007 during an examination conducted after the Bankruptcy Trustee obtained information from divorce proceedings in St. Louis County between Wagman and her husband. She admitted to owning the watch, ring, and bracelet at the time of her bankruptcy filing, despite not listing them on her personal property schedule.

Wagman, who formerly resided in St. Louis, but now resides in Daytona Beach, Florida, pleaded guilty to one felony count of making false statements under penalties of perjury in a bankruptcy proceeding in July.

Honesty is an important policy to keep in all areas of your life but especially your bankruptcy. There are certainly cases where a debtor has forgotten something and the court understood it was an honest mistake. This woman intentionally left off her jewelry because she didn’t want to give it up—and why? If she had just been truthful from the beginning, especially with her lawyer, all of this would likely have been avoided.

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