Are Amendments to Bankruptcy Schedules Proof of Perjury?

My Bankruptcy Law Network colleague Andy Miofsky, who practices in southern Illinois, referenced a very cogent “open letter to debtors and their counsel” that was issued in 1997 by a Bankruptcy Judge who sits in a California bankruptcy court.

Judge Jaroslovsky’s open letter points out that every schedule you file is issued under penalty of perjury.  Amending schedules to update information does not change the fact that the original filings were somehow false.  “I have no idea where anyone got the idea that amendments can cure false schedules,” writes the judge.  The debtor has an obligation to correct schedules he or she knows are false, but amendment in no way cures a false filing. Any court may properly disregard subsequent sworn statement at odds with previous sworn statements.

Specifically the judge references emergency, “two page” filings where the debtor lists one or two creditors (such as a mortgage or a vehicle lender) and swears under penalty of perjury that his schedules are accurate.  In truth, the debtor (and his counsel) know that other creditors exist.  The emergency filing, therefore constitutes perjury.

I think that Judge Jaroslovsky makes a valid point that most debtors and their attorneys readily use the amendment process to “fix” schedules that were knowingly inaccurate when filed.  I think it is incumbent upon debtors and their counsel to work with updated and accurate information. Perhaps it would be wise for debtors to indicate “more to come” on their emergency or initial filings.  However, I respectfully disagree with the judge that these amendments ought to be disallowed.

Filing bankruptcy in 2013 is much different than filing bankruptcy in 1997.  The breadth of information required by the means test alone, and the documentation necessary to verify this information can take weeks to gather.  Emergency or semi-emergency petitions, whether the result of dithering or truly unexpected developments are sometimes necessary.

Given that the bankruptcy court is an “honest but unfortunate” debtor’s last refuge from catastrophic and sometimes irreversible occurrences such as foreclosure or asset seizure, I think that bankruptcy judges ought to be prepared to show some patience with frazzled and confused debtors who are entering a confusing legal system.

Unless bankruptcy judges wish to spend the time to evaluate the back story behind every amendment to uncover the debtor’s and debtor’s counsel’s state of mind, I think that the harm to the system caused by extensive amendments is far outweighed by the benefit to debtors who may need an extra few days to make the process work as intended.

Congress has added a number of Code provisions intended to deter and punish serial or non-serious filers, and the means test and expanded document production requirements have made bankruptcy more difficult in general.  While I understand the judge’s concerns about sloppy lawyering and subjective truth, I conclude that additional procedural hurdles to filing and amending would be counterproductive.