On behalf of Trenton Grand of Grand Law Firm on Sunday, July 29, 2018.
One of the more important individuals in your bankruptcy case will be the trustee. After the United States Trustee Program appoints one, the trustee has several duties to perform for your estate whether you file a Chapter 7 or Chapter 13 bankruptcy. Some of these tasks include reviewing and rounding up all of your property, selling your estate and distributing any payments made to creditors.
The trustee is also in charge of detecting any inconsistencies or fraud in the papers and can make any objections to the bankruptcy plan. If they find anything wrong with your case at the meeting of creditors, they can object to the discharge and put you under criminal investigation. It is crucial that you prepare your case properly to avoid any legal and financial trouble.
Include all income on the document
A trustee looks over your income and pay stubs to see if you qualify for the respective bankruptcy relief. If the income does not match with the pay stubs or you have any additional income from a side job that you did not include, they can interrogate you and could find you ineligible for the bankruptcy application.
Make sure you follow the respective income requirements for your bankruptcy. For example, you would have to reveal your spouse’s income on a Chapter 13 bankruptcy, but you do not need to on a Chapter 7 unless your spouse is filing as well.
Do not hide any assets
Some individuals attempt to not include certain property that they plan to sell or transfer before the bankruptcy filing. Any property you have is essential to pay your creditors in any form of bankruptcy, so the trustee might grow suspicious if they notice any hidden or undervalued property in your report.
Any property transferred within two years of bankruptcy must appear on your statement of financial affairs. If it does not and the trustee discovers your deceit, they can file a lawsuit against you to recover these transferred properties for the creditors.
Avoid preferential debt payments
You might think that you can get rid of at least one problem before the bankruptcy proceedings by giving one of the creditors the debt you owe before filing. However, the trustee can classify this as preferential debt payment and take away that money to properly divide among the creditors.
You can avoid this by paying this debt at a specific time. The court can classify it as a preferential payment if it was made within 90 days before the bankruptcy filing and during a time where your liabilities greatly outweighed your assets. If the payment fits neither requirement and the trustee finds it would not make much of a difference in the current proceedings, then they will not question you heavily on it.
The trustee’s role is to make sure a bankruptcy filing runs smoothly. They do not choose a side between you or the creditors, they are just there to make sure your property receives fair distribution. While they can call out the creditors for any suspicious activity, they can also accuse you of fraudulent behavior and take legal action. It is important to review your documents to ensure that you are not missing anything important and have to deal with even more problems in your situation.