While not a frequent topic in most other areas of law, judicial estoppel is a frequent topic of conversation and concern in a bankruptcy practice.
Judicial estoppel is an equitable concept in the law which essentially provides that a person cannot take a position in a judicial proceeding at a later time which is inconsistent with a position that he or she has successfully asserted in an earlier judicial proceeding.
In layman's terms it means that you cannot take 2 different positions on the same issue in different legal proceedings.
In bankruptcy judicial estoppel becomes an issue when a person fails to schedule a potential legal claim, receives a discharge, and then attempts to enforce that legal claim. In such a situation, a savvy defense attorney will no doubt discover that you have filed bankruptcy, and will no doubt check the schedules to see whether you properly listed the claim you are now attempting to enforce.
When you file for bankruptcy, certain claims that you have must be scheduled and disclosed as they are considered assets of the debtor. These include, but are not limited to:
- Personal injury claims
- Automobile accident claims
- Right to a security deposit refund
- Practically any claim which you may have that could result in a lawsuit
- Whether anybody owes you money
In many cases, you will be barred from pursuing your claim if it existed (even if it was not yet fully recognized) at the time of the filing of your bankruptcy and it was not properly scheduled.
The reason that these claims must be scheduled is because they are assets of the debtor and are assets of the bankruptcy estate which is created when a debtor files for bankruptcy. As I tell all of my bankruptcy clients, when you file for bankruptcy you need to show the court everything you OWE and everything you OWN. To not make full disclosure of assets is equivalent to misleading the court as to your true financial situation.
If you hire an attorney to represent you in bankruptcy, this concept will be discussed with you and your attorney will work with you to determine how best to handle your potential claim or if you even have one in the first place. If you do have a claim, your attorney will help you schedule it properly so that it can be recognized and handled in a way which does not jeopardize your bankruptcy filing or your scheduled claim.
While there is the potential to amend the bankruptcy filing at a later date if you discover a claim that you possessed but failed to schedule for some reason, it is easier and more straightforward to simply be thorough and searching from the start.
If you are considering filing bankruptcy or are suffering from legal financial difficulties, contact me today at 407.984.5270 to schedule a free consultation. I would be happy to sit down with you and discuss your situation in detail and provide you with potential options, some of which you may not know exist.
The Law Office of Alex McClure provides services in Lake Mary, Sanford, Longwood, Deltona, Deland and all of Seminole, Volusia, Orange, Brevard and Lake Counties.