Filing Bankruptcy is a common practice. The Trustee isn't going to make you sit down, shine a light in your face, and demand to know why you're filing Bankruptcy. Life has unexpected pitfalls like a job loss, medical bills, related losses, and now especially with the effects of COVID failed businesses. We're here to help you file your Bankruptcy case and will anticipate all items questionable before you file.
If you're filing Chapter 7, a trustee will review your documentation looking for property you have that can be sold, or extra income available which will cause your Chapter 7 filing to possibly become a Chapter 13 case. A Trustee will of course look for any hidden assets you have, review your budget, and look at your financial documents to make sure they match up to your income. Lastly, an evaluation of all your worldly possessions will be made and checked against the exemption list to ensure you get to keep everything you're entitled to.
Bankruptcy schedules are those documents you file with the court. The information you provide must line up in your bankruptcy petition and schedules with all your documentation provided to the court. Examples of documentation you'll be providing include tax returns and bank statements. If something in your documentation looks off, additional documentation may be requested, or the Trustee may wait until the Creditor's Meeting (your 341 Meeting) to have you expand on questions he or she may have. If you're wondering if your Creditors will be at the Meeting, it is rather unlikely.
Once your exemptions, (that property you're entitled to keep and not sold to pay off debt), have been decided upon any property that didn't fit into an exemption is used to pay your creditors. Things a Trustee looks for are assets that may be partially exempt, a settlement in a divorce, IRS tax refunds, a lien on your property, lawsuits you have filed, and assets you own that produce income or royalty from.
A question one of my colleagues asks, semi-jokingly, is “What did you do with your yacht?” Ironically, one of his client's did have a yacht, and transferred it to another person, it was a small child, just before he filed bankruptcy. The Trustee looks for transfers you've made recently and will try to reverse the funds back into the bankruptcy estate. Other examples of transfers include monies transferred, payment(s) to relatives, transfers made without regard to their full value or an extremely large gift.
The Trustee will look very closely for the value of your property. For example, is your home worth more than what you have it listed for? Or, based on your household income do you have items of value that are disproportionate to your income. Do you have several luxury vehicles in the driveway, debt owed you didn't list, missing records regarding your finances, you claim to have lost property but there is not a police report for it, as examples. A Trustee can request to see you're your property, inspect and take inventory as well. Always, list everything you have so as not to cause any doubt about your case.
The Trustee will ask you about your documentation at the Meeting of Creditors, also known as a 341 Meeting. A Trustee can research your claim in other ways as well. In that Meeting, you will be under oath and a match of your ID will be examined. A Trustee will ask a series of questions to include whether you had an opportunity to review your petition before you signed it, if you believe you're going to be receiving more money, have you given a true accounting of your income and assets and if you need to amend your petition. Depending on the filing there will be other questions a Trustee may be asking.
This blog is intended for information purposes only and does not establish legal representation or financial guidance.