What starts off as a relatively routine Chapter 7 bankruptcy case can quickly turn into a headache due to a client’s mishandling of their finances. During the preparation of a bankruptcy petition, thoroughly reviewing the client’s bank statements is of high importance.

Small transactions may not seem like much, but there are times when, at first glance, you do not notice an issue, but upon second review you may notice transactions are going to another account that the debtor failed to disclose. Upon receipt of those bank statements from the previously undisclosed account, you then find that the debtor has a sizable balance that may or may not be fully protected.

Another thing would be to make sure you get an updated transaction history up through the day of filing prior to filing the case. There have been instances where a few days before a bankruptcy petición filing, the debtor received thousands of dollars, either from a family member or from a tax refund, or monies transferred from a previously undisclosed account.

It is imperative that the client fully understands the importance of perjury, both, in filing a bankruptcy petition, and when appearing in bankruptcy court before a trustee. Some clients take filing for bankruptcy lightly due to the fact that they know so many others who filed and had no issues. They start to listen to the advice of their friends and/or family members, rather than listening to their own attorneys.

Full disclosure is of the utmost importance and should be engrained in the client’s mind as they go through the petition preparation process. Once their Chapter 7 bankruptcy case is filed, there is no turning back and legal repercussions can occur, not just for them, but for well-meaning family members who were only trying to help the debtor out of a financial bind.