Could Your Social Media Account Damage Your Bankruptcy Case?
Can what you post on your social media accounts affect your bankruptcy claim? Yes. It could even totally dismantle it. Here's what you should know.
Due Diligence and the Bankruptcy Trustee
When you file for bankruptcy, you have a duty to disclose all of your assets - anything that you own that could potentially be used or sold to pay off your debts. Complete disclosure is considered your due diligence.
The bankruptcy trustee, in turn, has a duty to investigate to see if you have followed all the rules and meet all the requirements for bankruptcy before allowing you to proceed and forgiving your debts. That's the trustee's due diligence, and that includes checking to see if you've neglected to list any assets when you filed.
Your social media account essentially offers the bankruptcy trustee a quick and easy window into your world—one that can be opened without even bothering to hire an investigator, with just a few taps on a keyboard.
Careless Posts and Serious Consequences
How can a few simple posts unravel your bankruptcy petition? Consider these examples:
1.) Spending sprees and family vacations
A lot of people put off filing bankruptcy until after important events. If you file your bankruptcy petition in August, you may have long forgotten about the trip you took to Florida for your sister's wedding—the one you financed on your credit cards.
You may have considered the trip a necessity, but the trustee could consider it a luxury and require you to pay back the cost of the trip, plus anything else you charged during that time period.
2.) Unlisted personal property
Pictures of personal property could become very difficult to explain if you've forgotten to list any of the items that are visible. For example, if you showed pictures of the diamond earrings that your favorite aunt gave you for Christmas, those earrings had better be listed as part of your assets. The same goes for the expensive fishing gear that you're showing off in the pictures from your uncle's beach house.
Failing to disclose assets in your bankruptcy petition is federal perjury—you could face substantial fines and even jail time if the trustee decides it was deliberate.
3.) Undisclosed Income
A lot of people in financial distress pick up side jobs to try to make ends meet. If you've started trying to sell crafts—like handmade door wreaths, for example—from home to get a little extra income, you may not have thought to list it on your bankruptcy paperwork because you aren't making any profit yet.
The bankruptcy trustee, however, could view that as deliberate deception. At the very least, you'll likely be required to bring in proof of your expenses and sales to show that the income isn't enough to make a difference in your case.
What can you do to make sure that your social media habits don't become a problem during your bankruptcy? The best advice is to be completely honest. Make sure that you fully disclose anything assets or income that you have and discuss any potential problem spending you did prior to filing bankruptcy with your attorney before you file. Talk to a lawyer like Pagel Family Law for more information.