The bankruptcy trustee‘s job is to make sure that he examines your financial situation carefully to see if your creditors should be paid – and if yes, how much. The trustee will prepare a report with his recommendations and give it to the judge. In most cases, the judge follows the trustee’s recommendations and the judge’s role in the case is very limited unless there is some dispute that needs her attention, or if any involved party needs a court order on a bankruptcy-related matter before the case is over.
The trustee’s primary source of information about your financial situation is your bankruptcy petition and basic supporting documents such as taxes and pay stubs. However, the trustee can ask for additional documents such as bank statements, or may have her own questionnaire which she may ask you to fill out. Also, if there is information about you or posted by you in any public records or online, that’s also up for grabs and the trustee will often look at it as well.
If any information that the trustee finds about you seems inconsistent with other information in your case, or if it suggests that your financial situation has changed, the trustee will likely question you about it.
For example, “Jen” described her household goods and furniture as being worth only a few hundred dollars. The trustee was no doubt amused when she came across a YouTube video of “Jen” in her home showcasing her antique furnishings. The trustee asked “Jen” to amend her petition to provide a list and detailed description of each of these antique items.
“Doug” was described as unemployed in his bankruptcy paperwork. However, the trustee found “Doug’s” website where he was advertising his accounting services. This prompted the trustee to ask “Doug” if he was now running his own business, when he started the business, how much he made so far, and what the assets of the business were.
“Maya” had no real estate – or so it seemed. The trustee saw a party invitation on the web, inviting “Maya’s” friends over to a party at “Maya’s” home in Mexico. The trustee asked “Maya” about this invitation, and asked where the house was located, and if “Maya” owned it, co-owned it, or rented it for some purpose.
These were actual situations as observed in the bankruptcy court. Now, in many cases, the inconsistency has a reasonable explanation or, if there is any new information, it may not necessarily make a difference. Also, not everything that is posted online or in the public records is complete or accurate. But be careful: if the trustee concludes you were trying to hide assets or income, it would jeopardize the discharge of your debts and may expose you to criminal liability.
This leads to several suggestions. First, strive to be complete and accurate in your bankruptcy documents. If you realize you forgot about some relevant information, or that there was a mistake – don’t panic; just have your bankruptcy attorney amend the documents as soon as possible. If anything changes after the case is filed, but while the case is still pending – you should also amend the documents as soon as possible. If you feel any information in your background is confusing or can be misunderstood – be proactive and offer the extra explanation about it. And remember that in this day and age, for better or worse, there is a lot of easily accessible data floating around, and the trustee’s research and inquiry are not limited to your bankruptcy petition.