The First Circuit Court of Appeals recently denied a debtor his discharge for failing to list an exempt retirement account on his bankruptcy schedules.  In the case of Premier Capital, LLC v. Richard Crawford, the First Circuit upheld a decision by the Massachusetts Bankruptcy Court to deny a debtor his discharge as to all debts due to his failure to list an asset, after a trial in which the debtor testified.  The debtor explained that the total amount of his retirement accounts were listed on his schedules, even though he listed only one account, instead of two.  The debtor admitted that his retirement statement listed two separate accounts, and indicated that he didn't have a good answer for failing to list both, although he said he described the total amount in both accounts in the one account he did list on his schedules.

The Bankruptcy Court found that the debtor was  "less that credible" based upon numerous misrepresentations and that he gave evasive answers.  Premier asserted that debtor had given a false oath in violation of Code Section 727(a)(2)(4)(A).  Both the Bankruptcy court and The First Circuit agreed and held that the existence of an asset is as important as its value.  It does not matter whether creditors can reach the asset (because it is exempt).  Honest disclosures by a debtor require a thorough listing of every asset, regardless of its value.

The First Circuit noted that this decision should not be seen a draconian.  Incorrectly listing the age of an asset or misstating the amount owed on a credit card may be harmless errors.  The Court further stated that a debtor's discharge should not be at risk by an esoteric mischaracterization.  Notwithstanding the Court's statements at the end of its opinion, the decision is a warning to all debtors to be extremely careful and to be as accurate as possible in listing all assets on their bankruptcy schedules.