Testifying Under Oath In Bankruptcy Proceedings

Filing a bankruptcy petition involves a lot more than just choosing what type of proceeding you'll pursue and proving what your financial situation is. Creditors have rights under bankruptcy law, and one of those rights includes questioning the filing party under oath. That means petitioners need to be prepared for what may come if a creditor elects to do more than just assert a claim that they're owed money. Let's take a look at how sworn testimony might figure into a bankruptcy case.

When is Testimony Expected?

First, in many cases, nothing more happens than the petitioner files a brief, and the creditors file their claims. If a creditor has suspicions about what's going on or wants to examine the validity of a debtor's petition, though, they can ask for testimony. Unless there are extraordinary circumstances, sworn testimony is supposed to be presented during the legally required meeting of creditors.

When a bankruptcy petition moves forward, the court will appoint a trustee. This person's job is to ensure that the debtor pays as much of what they owe as is reasonable under the circumstances. To that end, they will call a meeting of creditors, presenting those who are owed money a chance to examine documentation, ask questions, and raise concerns. It's at this time that a debtor may be placed under oath and asked questions.

How Does the Meeting Work?

During the meeting of creditors, the judge assigned to the case is not present. Instead, the trustee will act as an officer of the court and exert its powers as necessary. The trustee will initiate the process during the meeting with questions about the debtor's assets, liabilities, and near-term financial condition. After the trustee has concluded their questioning, the creditors' counsel will have a limited amount of time when they can then ask questions.

Do You Need to Lawyer Up?

Yes, having a bankruptcy attorney present during this type of questioning is highly advised. The record of the meeting may be admitted into evidence at a later date, meaning it can be used against you in a court of law.

The main concerns are usually the avoidance of debts and the concealment of assets. In most cases, the court will sanction a debtor by throwing out the petition or compelling full disclosure. If the debtor's actions appear to be especially egregious, a felony criminal referral for fraud or perjury may follow. Speak to a bankruptcy attorney for more information.