What problems can arise after the petition is filed?
Problems can arise if information on the petition is inaccurate or if material information is withheld. Submitting false information to the court or withholding material information can lead to dismissal of the petition, or even to criminal prosecution. Problems can also crop up if creditors or the trustee suspect fraud. This can occur where debtor living at poverty level runs up large debt on luxury goods or an expensive vacation shortly prior to filing for bankruptcy. Suspicion may also arise if the debtor transfers assets to relatives or friends in the days leading up to filing. A creditor suspecting fraud may commence an adversary proceeding, which can lead to full-blown and costly litigation. Prior to filing a petition, the debtor should make sure there are no signs of fraud that would likely trigger a denial of the petition or an adversary proceeding.
