In consumer Bankruptcy cases, especially Chapter 7 cases, completing the Schedules is one of the most important tasks. The Schedules identify (among other things) all your creditors, your property (and values of the property), your exemptions, income and expenses. In Chapter 13 cases, they will show the disposable income that will be paid to the Chapter 13 Plan. In most cases, our office spends more time on preparing the Schedules than any other task in the case. We normally exchange several drafts and I review each draft for corrections or “red flags.” If the Schedules are complete and correct, the rest of the case usually falls into place. In Chapter 7 cases, Trustees may promptly enter a no-asset report after the first meeting of creditors because they have all the information they need. I am sure I have annoyed a few clients by my persistence in making sure the Schedules are correct when they are filed. If Schedules are not correct, it can lead to additional filing fees and attorneys fees for amendments, rescheduling or repeating the first meeting of creditors, causing the Trustee or U.S. Trustee to investigate the case in more detail (again, leading to more time and fees) and, in a few cases, leading to claims that the client intentionally filed false schedules. At this point, it is important to note that there is rarely a penalty for making unintentional errors as long as they are timely corrected. Mistakes happen, and that is usually not a problem. This leads us to the question above: who, exactly, has final responsibility for making sure the schedules are true and correct? Is it the lawyer or the client? Although there are gray areas, the ultimate responsibility falls on the client, with significant assistance from the lawyer, to make sure the Schedules are complete and correct.
There are two main reason for this. One, virtually all of the information in the Schedules come from the client. The lawyer typically has no way of knowing who the client owes, their income, assets, etc. Two, it is the client who has the final responsibility to fully review the drafts and final Schedules to make sure they are complete and correct, and sign in several places under penalty of perjury. I ask our clients to review each and every line of the 40 or so pages of the final draft, even if the section does not apply to them. Sometimes memories are jogged as they go through this exercise. That said, as lawyers we have a big responsibility in making sure the client understands each and every page of the Schedules, which include quite a bit of legelese. In addition, we often will review public records that are available online to double-check the information. That may include real property records, real estate values (such as zillow), liens, lawsuits, and other information. Some lawyers will obtain credit reports or instruct the client on getting a free report. However, even with this additional information, it is still the client’s responsibility to review the information we obtain and confirm it is correct. Good Bankruptcy lawyers will personally make sure their clients are fully informed as to what is required by in the Schedules and make sure the clients understand each section.