The short answer: To avoid fraud charges and to prevent the bankruptcy trustee from taking assets which may be exempt.
Most people file bankruptcy because they can no longer pay their creditors. When you file a Chapter 7 bankruptcy you are asking for the federal government to stop all your creditors from collecting, and appoint a trustee who will collect for them up to the limits allowed under bankruptcy laws. The appointed trustee also has the job of detecting fraud, by finding people who are making misrepresentations as part of the bankruptcy process.
A good bankruptcy attorney can prepare the bankruptcy filings so that nothing is omitted. The trustees do not just look for statements that are not correct on the filings, but also statements that are missing. Bankruptcy filings require you to list all of your assets, and require you to sign under oath that you have listed all of your assets. You will then have a hearing before the trustee where you will take an oath and state under oath whether you have listed all of your assets. If you have omitted items, even inadvertently, there is a risk that the trustee will look further for fraud in your case. If a trustee believes there is fraud, then they will file a motion to prevent you from having your debts discharged or forgiven.
