Privilege Against Self-Incrimination

Asserting one's privilege against self-incrimination can not be used as a grounds for barring discharge, unless the debtor has been granted immunity. Nor is refusal to testify in a bankruptcy proceeding on self-incrimination grounds necessarily grounds for denial of confirmation of a Chapter 11 plan, unless the refusal to testify impedes basic administration of the case. A defendant has no absolute right not to be forced to choose between testifying in a civil matter and asserting his or her Fifth Amendment privilege.

Reasonable Basis for Belief that Testimony Self-Incriminating

The Fifth Amendment privilege protects any natural person, although not a partnership or corporation, against being legally compelled to provide testimonial information that might tend to incriminate that person. To assert the Fifth Amendment privilege successfully, and thereby be justified in refusing to testify without immunity, the debtor must show a reasonable basis for believing the testimony will be self-incriminating; if that basis is not self-evident, the court may require some explanation.

Testimonial Compulsion

Testimonial compulsion may come in the form of a demand for witness testimony, but in some cases the privilege may also be invoked as justification for the debtor's refusal to prepare otherwise-required schedules, or to produce books and records in his or her possession. However, since a corporation or partnership has no privilege under the Fifth Amendment, the privilege can never justify the refusal of such entities to complete required forms or to turn over books and records, nor is the custodian of records appearing on the corporation's behalf entitled to refuse production on the basis of the custodian's personal privilege. The self-incrimination privilege is not self-executing; if the debtor or witness testifies or provides requested information without invoking the privilege, the privilege is waived.

Dismissal of Case or Denial of a Discharge

If a debtor has refused to testify, to answer written questions, or to produce books and records in reliance on the Fifth Amendment and immunity has not been granted, the invocation of privilege will not alone suffice to require dismissal of the case or denial of a discharge. However, if the debtor's invocation of privilege, in the context of all the circumstances of the case, prevents the trustee from administering the estate, dismissal of the case or denial of a discharge may result as provided by other provisions of the Bankruptcy Code.

Adverse Inference

Additionally, an adverse inference may be drawn in the bankruptcy case against a debtor who relies on the Fifth Amendment privilege, even if the debtor does so properly. And if the debtor's invocation of privilege, in light of all the circumstances of the case, results in a failure of proof on a matter as to which the debtor has a burden of proof, the resulting failure of proof may carry consequences as provided by other provisions of the Bankruptcy Code.