United States Bankruptcy Appellate Panel
                            FOR THE EIGHTH CIRCUIT
                                 _______________

                                       No. 05-6033NI
                                     ________________

In re:                                       *
                                             *
Vicki Jo Bauder,                             *
                                             *
         Debtor.                             *
                                             *
                                             *
Michael W. Ellsworth,                        *
                                             * Appeal from the United States
         Plaintiff - Appellee,               * Bankruptcy Court for the Northern
                                             * District of Iowa
               v.                            *
                                             *
Vicki Jo Bauder,                             *
                                             *
         Debtor - Appellant.                 *
                                           _____

                                 Submitted: October 15, 2005
                                  Filed: November 14, 2005
                                            _____

Before SCHERMER, FEDERMAN, and VENTERS, Bankruptcy Judges.
                            _____

VENTERS, Bankruptcy Judge.

       This is an appeal of the bankruptcy court's June 20, 2005 memorandum decision
denying the Debtor’s discharge under 11 U.S.C. § 727(a)(4). We have jurisdiction
over this appeal pursuant to 28 U.S.C. § 158(b). For the reasons set forth below, we
reverse the court’s decision.
                            I. STANDARD OF REVIEW
       “Findings of fact, whether based on oral or documentary evidence, shall not be
set aside unless clearly erroneous, and due regard shall be given to the opportunity of
the bankruptcy court to judge the credibility of the witnesses.”1 The bankruptcy
court's determination that the Debtor knowingly and fraudulently made a false oath
or account under 11 U.S.C. § 727(a)(4)(A) is a factual determination which is
reviewed for clear error on appeal.2

                                II. BACKGROUND
      The essential facts of this appeal are not disputed, although their interpretation
is.

       The Debtor, Vicki Jo Bauder, is 52 years old. Her formal education does not
extend beyond the eleventh grade, and based on her uncontradicted testimony, she
suffers from adult attention deficit disorder, depression, and anxiety. The Plaintiff,
Michael W. Ellsworth (“Ellsworth”), is Bauder’s former boyfriend. He lived with
Bauder intermittently from sometime in 2002 to September of 2003.

      Bauder filed for protection under chapter 7 of the bankruptcy code on March
10, 2004. She listed the following property on her original schedule of personal
property: household goods valued at $575; wearing apparel valued at $300; a pension
valued at $15,595.78; tax refunds and accrued wages of $1,000; and a 1999 Grand
Prix automobile valued at $3,700. The Debtor claimed exemptions for all of this
property, except for the automobile.



      1
          Fed. R. Bankr. P. 8013.
      2
       Korte v. United States Internal Revenue Service (In re Korte), 

, 470 (B.A.P. 8th Cir. 2001); Cepelak v. Sears (In re Sears), 

, 347
(B.A.P. 8th Cir. 2000).
                                           2
       On April 19, 2004, the Debtor attended her § 341 meeting of creditors.3 Nine
days later, she amended her schedules to disclose additional personal property in her
possession,4 several items of property in her possession that she held for another, and
a diamond ring valued at $300, which she indicated was in her daughter’s possession.5

        Ellsworth filed the underlying adversary proceeding the day after the Debtor
amended her schedules. Ellsworth alleged that the Debtor had omitted from her
(original) schedules various pieces of personal property,6 including the diamond ring
listed in her amended schedules. At trial, the Debtor provided various explanations
why property was omitted from her original schedule of personal property. With
regard to the diamond ring, the Debtor testified that she didn’t list it in her original
schedules because she had previously given it to her daughter for safekeeping and
forgot about it when she filled out her original schedules. She also testified that she
didn’t list it because an “office employee” at her attorney’s office told her that she
only had to list property in her possession. Regarding the ring’s value, the Debtor did
not dispute that Ellsworth purchased it for her for about $1,000, but she explained that
it had fallen into disrepair – a diamond was missing and several prongs were bent –
and that a pawn shop told her it was only worth three or four dollars. She estimated


      3
        As discussed below, the Plaintiff’s counsel’s direct examination of the
Debtor suggests that he questioned her about specific property, including the
diamond ring at issue, at the § 341 meeting, but there is no actual testimony in the
record elucidating what transpired at that meeting.
      4
      Rule 1009 of the Bankruptcy Rules provides that schedules "may be
amended by the debtor as a matter of course at any time before the case is closed.”
      5
        Because the court based its holding solely on the Debtor’s failure to list the
diamond ring in her original schedules, it is not necessary to list the other property
disclosed on the amendment to her bankruptcy schedules.
      6
       The list of omitted property referenced in the Plaintiff’s adversary
complaint is not part of the record.
                                           3
its value at $300, although she claimed that it really only had sentimental value. The
Debtor testified that she disclosed the ring on her amended schedules because she
learned (presumably after the § 341 meeting) that she had to list property she owned
even though it was in the possession of another, and her daughter reminded her of the
ring when they filled out the Debtor’s amended schedules together.

                                 III. DISCUSSION
       Under 11 U.S.C. § 727(a)(4)(A), a debtor shall be granted a discharge unless
“the debtor knowingly and fraudulently, in . . . the case – made a false oath.” To bar
discharge, the false oath must be material.7 The subject matter is material if it
concerns the discovery of assets or the existence and disposition of estate property.8
Intent under § 727 can be established by circumstantial evidence.9 Statements made
with reckless indifference to the truth are regarded as intentionally false.10

       The court based its denial of the Debtor’s discharge solely on the Debtor’s
failure to list a diamond ring on her original schedules.11 “Bauder’s schedules were
knowingly false because she failed to list her ownership in the diamond ring.”12 The
court reached this conclusion after determining that her explanations for not listing the
ring were not credible and were “contradictory.”

      7
          Mertz v. Rott, 

, 598 (8th Cir.1992).
      8
          

re 

.
      10
           

Court also noted its concern over what it interpreted as an improper
attempt by the Debtor to conceal assets by discounting them as valueless (and,
therefore, not necessary to be disclosed), but specifically stated that it did not
decide the issues on the failure to list “valueless” property. Memorandum
Decision, p. 8.
      12
           

we recognize that courts should be given “due regard” to determinations
of credibility and that this opinion ostensibly hinges on the Debtor’s credibility, upon
review of the record as a whole and in light of the yardstick of culpability required
under § 727(a)(4) established in In re Bren,13 we are left with the distinct impression
that the court committed clear error when it concluded that the Debtor knowingly and
fraudulently made a false oath in the case.

         First, the court found that “the fact that her reasons for not listing the ring
contradict each other, detract from her credibility,” but the court’s discussion of that
contradiction indicates that the court’s assessment of her credibility on that point was
based on an erroneous review of the record. Specifically, it appears that the court
confused the Debtor’s explanations of why she did not list other “valueless” property
with the reasons given for why she failed to list the ring on her original schedules.
The court found that the Debtor’s testimony that the ring only had sentimental value
was inconsistent with the decision to give it to her daughter to put it into a safe-deposit
box – an action which the court interpreted as suggesting that the Debtor believed that
the ring had significant economic value. But the Debtor never testified that she
omitted the ring because it wasn’t worth a lot, although she did offer testimony about
its lack of value. Rather, the Debtor offered only two explanations for why she failed
to list the ring on her original schedules: (1) because she believed that she only had
to list items in her possession, and (2) because she forgot about the ring at the time she
filled out her schedules. And those explanations are complementary, not
contradictory. If the Debtor believed (even if in error) that she only had to disclose
items in her possession, it is logical, and likely, that she might not recall items that
were in another’s possession. These explanations are even more plausible given the
Debtor’s limited education and affliction with attention deficit disorder.

      Second, we find it problematic that the court did not give any weight to (or even
mention) the fact that the Debtor disclosed the ring in her amended schedules shortly


      13
           122 Fed.Appx. 285, 289 (2004).
                                            5
after the § 341 meeting of creditors and before this adversary was filed. A debtor’s
subsequent disclosure of an asset does not absolve a debtor from an initial omission,
but depending on the circumstances, it may be evidence of innocent intent.14 And in
this case, we believe that it is – primarily because there is no evidence in the record
regarding the impetus for the Debtor’s subsequent disclosure of the ring. It is fair to
assume that she disclosed it in response to something that occurred at the § 341
meeting, but the record is devoid of any indication as to what transpired at that
meeting.15 The Debtor testified that some time after the § 341 meeting she and her
daughter went to the Debtor’s attorney’s office where her daughter assisted her in
compiling the list of items to be added to the Debtor’s schedules. Many of those items
were in her daughter’s possession. That testimony is consistent with the Debtor’s
testimony that she thought she didn’t have to list things in other people’s possession
and the fact that the ring was in her daughter’s possession.




      14
        See, e.g, Gullickson v. Brown (In re Brown), 

, 1294 (10th
Cir. 1997); In re Kilson, 

, 203 (Bankr. D. Conn. 1988).
      15
        The transcript does contain a statement by Plaintiff’s counsel that he
questioned the Debtor about “these items” at the § 341 meeting, but that statement
does not constitute testimony or evidence. The Debtor’s answers on direct did not
confirm or contradict Plaintiff’s counsel’s statement.
                                          6
      The Plaintiff bears the burden of proof to establish fraudulent intent,16 so in the
absence of any evidence indicating that the Debtor’s disclosure was not self-
motivated, we take the Debtor’s prompt disclosure of the ring on her amended
schedules – filed before this adversary proceeding and as authorized by Bankruptcy
Rule 1009(a) – to be evidence of the Debtor’s innocent intent which the court failed
to consider.

       Third, we have reservations as to whether the omission, even if made
knowingly, was material. The omission of property of trivial value is immaterial,17
and the Debtor’s testimony that the ring in its current condition is only worth a few
dollars was uncontradicted.18

       Finally, we are guided in our decision here by the Court of Appeals recent
decision in In re Bren, where the Court granted a discharge to a significantly more
sophisticated debtor who initially failed to list, but later disclosed prior to the filing
of an objection to discharge, her interest in a “modest” inheritance, and who claimed
ignorance of other significant omissions related to property and business dealings
allegedly managed entirely by her husband.19 Put simply, if Mrs. Bren qualifies for
a discharge, then a person who has a limited education, who has attention deficit



      16
         In re Sendecky, 

, 762 (B.A.P. 8th Cir. 2002) (“The denial of a
debtor's discharge is a ‘harsh sanction,’ therefore, the provisions of 11 U.S.C. §
727(a) are ‘strictly construed in favor of the debtor.’ The burden of proof is on the
objecting party to prove each element of a section 727 Complaint by a
preponderance of the evidence.”) (citations omitted).
      17
         See In re Lebahn, 

, *4 (Bankr. N.D. Iowa 2004). Cf.
Mertz v. Rott, 

, 598 (8th Cir. 1992) (holding that omission of exempt
property is material even though the creditors are not affected by the omission).
      18
           Even valued at $300, the omission is borderline immaterial.
      19
           In re Bren, 122 Fed.Appx. at 289.
                                            7
disorder and other mental/emotional problems, and who omits but then timely
discloses a worthless ring from her schedules certainly should.

                               IV. CONCLUSION
      For the reasons stated above, we reverse the bankruptcy court’s denial of the
Debtor’s discharge pursuant to 11 U.S.C. § 727(a)(4), and remand for entry of an
order of discharge.

SCHERMER, Bankruptcy Judge, Dissenting.
       I respectfully disagree with the majority’s conclusion that the bankruptcy court
erred in denying the Debtor’s discharge. I agree with the majority that the bankruptcy
court’s determination that the Debtor knowingly and fraudulently made a false oath
or account under 11 U.S.C. § 727(a)(4) is a factual determination which is reviewed
for clear error. Findings of fact shall not be set aside unless clearly erroneous. A
finding is clearly erroneous when although there is evidence to support it the
reviewing court is left with the definite and firm conviction that a mistake has been
committed.20 A reviewing court cannot reverse the trial court’s findings simply
because it is convinced that it would have decided the case differently.21 An appellate
court oversteps its bounds if it decides factual issues de novo.22 If the trial court’s
account of the evidence is plausible in light of the record viewed in its entirety, the
appellate court may not reverse even though it would have weighed the evidence




      20
           Anderson v. Bessemer City, 

, 573, 

, 1511
(1985).
      21
        Id.; Handeen v. LeMaire (In re Le Maire), 

, 1349 (8th Cir.
1990)(en banc).
      22
           

, 105 S.Ct. at 1511.
                                           8
differently.23 Furthermore, where there are two permissible views of the evidence, the
trial court’s choice cannot be clearly erroneous.24

        Due regard shall be given to the opportunity of the trial court to judge the
credibility of the witnesses. Fed. R. Civ. P. 52(a). Accordingly, great deference must
be given to the trial court when its findings turn on an assessment of credibility.25
“[O]nly the trial judge can be aware of the variations in demeanor and tone of voice
that bear so heavily on the listener’s understanding of and belief in what is said.”26
        In the instant case, the bankruptcy court’s decision was based on its assessment
of the credibility of the Debtor’s testimony. The Debtor gave three reasons why she
did not list the diamond ring: she forgot about it because it was not in her possession;
she was told she did not have to list items not in her possession; and it was essentially
valueless. Her reasons for not listing the ring are inconsistent. If she had forgotten
about the ring, she would not have asked if she needed to list it as property when it
was not in her possession. If she believed it had no value, why did she give it to her
daughter to store in her safe deposit box? The trial judge observed the Debtor as she
testified and determined, based on her demeanor and tone, that she had knowingly and
fraudulently failed to disclose the ring on her schedules which she signed under oath.
Such a determination is not clearly erroneous. The majority accept the Debtor’s
inconsistent explanations because, in part, the Debtor has a limited education and is
afflicted with attention deficit disorder. I respectfully disagree that the Debtor’s
inconsistencies in her explanations should be excused. If a debtor has the capacity to
attest under oath as to the truthfulness and accuracy of schedules, then the accuracy
of such schedules should not be dependent upon one’s education or condition.


      23
           

, 105 S.Ct. at 1511.
      24
           

470 U.S. at 

; 

;
Cepelak v. Sears (In re Sears), 

, 352 (B.A.P. 8th Cir. 2000).
      26
           

, 105 S.Ct. at 1512.
                                           9
Accuracy of schedules “is fundamental because the viability of the system of
voluntary bankruptcy depends on full, candid, and complete disclosure by debtors
. . .”27

       The majority relies heavily on the Bren decision in reaching its conclusion,
noting that if Mrs. Bren qualifies for a discharge, this Debtor should too. I believe the
majority puts too much emphasis on Bren. Although it is the most recent decision of
the Eighth Circuit Court of Appeals on the subject of a false oath in bankruptcy, it is
but one unpublished28 split29 opinion. Published precedent in this circuit makes it
clear that in order for a false statement to bar a discharge, the false statement must be
material.30 The subject matter of a false oath is material and thus sufficient to bar
discharge if it “bears a relationship to the bankrupt’s business transactions or estate,
or concerns the discovery of assets, business dealings, or the existence and disposition
of his property.”31 The Debtor’s failure to list the ring in her schedules clearly


      27
           In re Searles, 

, 378 (B.A.P. 9th Cir. 2004).
      28
         Rule 28A(I) of the United States Court of Appeals for the Eighth Circuit
states that unpublished opinions are not precedent and parties generally should not
cite them. The rule contains an exception permitting reliance on unpublished
opinions if the opinion has persuasive value on a material issue but only if no
published opinion of the Eighth Circuit Court of Appeals or another court would
serve as well. The Eighth Circuit Court of Appeals has published two other
opinions directly on point: Mertz v. Rott, 

(8th Cir. 1992) and
Palatine Nat’l Bank of Palatine, Illinois v. Olson, 

(8th Cir. 1990).
      29
        One member of the three judge panel which decided the Bren case
dissented, arguing that Mrs. Bren should have been denied a discharge. Both
Mertz and Olson were unanimous decisions.
      30
        Mertz v. Rott, 

, 598 (8th Cir. 1992); Palatine Nat’l Bank of
Palatine, Illinois v. Olson, 

, 484 (8th Cir. 1990).
      31
         In re Chalik, 

, 618 (11th Cir. 1984), quoted in 

, and 

.
                                           10
“concerns the discovery of assets” and the “existence of property” and is therefore
material.

       The fact that the ring may have minimal value does not render the Debtor’s
omission immaterial. The Eighth Circuit Court of Appeals rejected that argument in
Olson. “While we are not prepared to say that value is irrelevant to materiality, we
are certain that it is not determinative.”32 The debtor’s duty is to disclose all assets,
not merely assets that the debtor believes have value. The petition, schedules, and
statements must be accurate and reliable.33 Trustees and creditors should not be
required to dig out and conduct independent examinations to get the facts.34


      32
         

court has previously stated, “an omission of a relatively modest
asset will merit denial of discharge, if done with knowledge and fraudulent intent.”
Cepelak v. Sears (In re Sears), 

, 347 (B.A.P. 8th Cir. 2000).
      33
         

. See also, Korce v. United States Internal Revenue
Service (In re Korce), 

, 474 (B.A.P. 8th Cir. 2001), in which this court
said:

      As § 727(a)(4)(A) makes clear, “[t]he Code requires nothing less than a full
      and compete disclosure of any and all apparent interest of any kind.
      Phocaena v. Trip (In re Trip), 

, 98 (Bankr. N.D. Iowa
      1998)(citing In re Craig, 

, 445 (Bankr. D. N.D. 1996)).

The court added:

      The failure to comply with the requirements of disclosure and veracity
      necessarily affects the creditors, the application of the Bankruptcy Code, and
      the public’s respect for the bankruptcy system as well as the judicial system
      as a whole.

(quoting Nat’l Am. Ins. Co. v. Guajardo (In re Guajardo), 

, 742
(Bankr. W.D. Ark. 1997)).

      34
           

provides debtors with a great benefit: the discharge of debts. The price
a debtor must pay for that benefit is honesty and candor. If a debtor does not provide
an honest and accurate accounting of assets to the court and creditors, the debtor
should not receive a discharge. Section 727(a)(4) serves to ensure that only honest
debtors receive the benefit of a discharge.

       In my opinion the bankruptcy court did not err in its finding that the Debtor
knowingly and fraudulently made a false oath. Since the bankruptcy court’s decision
is consistent with Eighth Circuit precedent, I would affirm.




                                         12