When you filed for bankruptcy, you must disclose all assets in your bankruptcy petition. A legal claim or lawsuit where you are the plaintiff is considered an asset and must be disclosed in your bankruptcy proceeding. Even if you have not filed a lawsuit but have a legal claim against someone that you potentially have a right to recover from, you must disclosed that claim. For example, if you are a passenger in a car involved in a collision caused by another driver but have not filed a lawsuit, this is a potential claim to recover damages from another party and must be disclosed in your bankruptcy petition.
Failure to disclose assets can result in losing your bankruptcy discharge.
Moreover, failure to disclose a legal claim or a pending lawsuit can result in the dismissal of your lawsuit to recover for damages against another party. The courts have a rule that penalize people who take one legal position in one court, and a contrary position in another court. The legal principle is called "judicial estoppel". For example, if you told the bankruptcy court that you did not have a personal injury claim against Joe, you cannot file a lawsuit against Joe in the California Superior Court for personal injury. Most likely, the defense attorney representing Joe will request that the personal injury lawsuit be dismissed. Because your claim was omitted from the bankruptcy petition, it was treated as if your claim did not exist. You end up losing your lawsuit for damages not because you don't have proof that Joe injured you but because you did not disclose your potential claim against Joe for personal injury in your bankruptcy petition.
Fore more information call to schedule an appointment with Muoi Chea Bankruptcy Attorney in Sacramento, Stockton, Fairfield, California Law Offices, serving all residents of Northern and Central California.