Failing to disclose claims or lawsuits in your bankruptcy filing is dishonest and could allow the court to discharge your case and even to pursue criminal charges. Additionally, not disclosing this information may result in dismissal of your claim or lawsuit, making it impossible to recover any damages.
When you file for bankruptcy, you must file ‘schedules’ which identify all of your debts and all of your assets. If the act/event which created your legal claim occurred before you “filed” for bankruptcy, it must be listed on your ‘schedules’. This includes lawsuits, potential lawsuits, and filed or unfiled insurance claims. Example: If you were injured in an accident prior to your bankruptcy filing which might give rise to a claim then you must list this on your schedules even if a lawsuit has not yet been filed or an insurance settlement has not been received.
Your potential claim is an asset which the bankruptcy trustee has a right to pursue on behalf of your creditors. If the court finds you intentionally failed to list legal claims/lawsuits, they will likely deny your bankruptcy discharge. If discharge was already granted, they will likely revoke it. Even worse, you could be subject to criminal sanctions including fines and jail time.
And just don’t think in terms of major claims, but also those notices that we receive from time to time in the mail which tell us that we are part of a class action lawsuit. Make sure to disclose to your bankruptcy attorney if you might be a potential claimant and have that listed in the schedules.
The upside to listing “potential” claims is that in many instances the trustee will make a cursory evaluation and then abandon it. If the abandoned claim is later litigated, the trustee and your creditors have no right to recovery.