During Bankruptcy Assets Count No Matter How Small

September 7th, 2009 by Reed Allmand

In the bankruptcy case of Cannon, Nickey M.; In re (Cesnick v. Can­non), the bankruptcy court denied the debtor’s discharge because he failed to disclose that he owned a small interest in a business venture from which he received some income.

The details of the bankruptcy case:

The debtor filed for Chapter 7 bankruptcy after a state court found him liable for $68,460.  The debtor claimed in his bankruptcy filing that his only income was $812 a month in Social Security payments.  However, it was later revealed that the debtor had received a total of $2,200 in October 2008 from a company owned by the debtor’s brother in which the debtor has a 10 percent interest. Unfortunately for this debtor he failed to include this source of income on his bankruptcy paperwork, giving the impression that he was attempting to conceal income/assets and deceive the bankruptcy court. The bankruptcy court ruled that the debtor intentionally made false statements to the bankruptcy court at the time of his filing and that the statements were made with the intention to defraud.

The bankruptcy court said:

“It may well be that the debtor’s business activities receiving payment from construction jobs and having a 10 percent ownership interest in Cannon Contracting prove to be worthless to the Cesnicks in their attempt to collect on their judgment. The debtor is not, however, entitled to withhold this type of business information from his creditors when he files a bankruptcy petition. No basis exists on summary judgment to find that the debtor’s omissions in his schedules and statements were innocent; the omissions of the debtor are consistent inaccuracies, exceeding that of an honest mistake. At a minimum, the debtor has exhibited a reckless indifference to the truth and accuracy of his schedules and statement of financial affairs, which is the functional equivalent of an intent to deceive.”

About Reed Allmand

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Allmand's vision is rooted in his own financially precarious childhood in Abilene "My father always had difficulty holding a job and supporting our family, so after my parents divorced when I was 12, my sister and I got jobs to help make ends meet," he recalls. "I remember what it felt like as a child to worry that our car would be repossessed or home foreclosed on."

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