How Far Back Are Bank Records Checked When Filing for Bankruptcy?

Written by James Hirby | Fact checked by The Law Dictionary staff |  

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When one files for bankruptcy, that person knows, or should know, that the court will be looking at the debtor’s life very closely and the debtor’s bills and payment records even closer. Under normal conditions a Chapter 7 bankruptcy trustee or a Chapter 13 court official will want to review your bank account records and your credit loans and card account records and your tax filings and other financial dealings. What the inquirers are looking for are hard cash and saleable assets that can be seized to pay debt. They will also be looking for evidence of any income or assets that are by law are exempt. Just like the debtor, the court appointed people and the creditors are bound by both federal and state laws.

Having your records available and organized tells the court and its officials that you are ready to cooperate. Although it is a difficult situation, having a good attitude and showing a willingness to work with the court officials often works in your favor, when discussing hardships, seizures, and exemptions. Several people have noted a “favorable” result from being forthright and open.

For taxes, many people and some experts stated to expect to be asked for two years prior filings. For the rest, it appears that about three months of prior records are what is likely to be requested. Again, this is typical. Of very special note, everyone stated to remember that in all dealings with the court, judges, appointed officials, you are under oath. When you file for bankruptcy and deliver requested documents, you file them while you are under oath. This means two things. One, the penalty for deceit, not just an honest mistake, is possible fraud and perjury charges. Two, the courts and its officials may start asking for many more months of documentation to determine fraud and its extent. Several people had some good experiences as advice, but also had one oddity that struck a chord that needed mentioning. Depending on whom your circle of friends and business dealings are, consider if you have had any financial conflicts or bad feelings around financial dealings. The reason is that an unfriendly acquaintance that knows something about your finances that you might not be forthcoming about with the courts might come forth and tattletale on you. This might put you into the fraud and perjury situation mentioned previously. Also, some experts warned that, like the IRS, when fraud is suspected, the agency or court will go as far back as it wants or can to prove out the charges.

As stated before, three months of records seems to be a norm in most of the state jurisdictions. Some people noted that some states automatically request more records. One person stated that Kentucky requests six months of prior records. A decent source for information about bankruptcy and what goes on exists onlilne. Several experiences by people who filed repeated the same mantra, that different states have different rules beyond the federal rules and, as always, that a good lawyer is worth the money paid.

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