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Bankruptcy Documentation: Number of Months of Reference Material

When a person files for bankruptcy and presents all of the expected information and documentation need at this initial filing, this person, the filer, becomes the debtor when the filing is accepted by the court.  Regardless of it being for whatever chapter, the debtor’s submission must all be the truth.  The penalty for lying or fraud is immediate dismissal of the bankruptcy and possible prosecution for misusing federal law for fraudulent activities.  To insure the accuracy of information and to manage the case, the court assigns the bankruptcy trustee.  The trustee will hold a hearing, required by Federal Bankruptcy Law (FBL), section 341.  This “341” hearing is where the trustee will interview the debtor about the information in the initial filing content, talk with attending creditors, allow the creditors to interview the debtor, until the trustee has an experienced level of confidence in what the financial situation with the debtor truly is.  In a Chapter 7 bankruptcy the trustee sets up the bankruptcy estate for the debtor, where any worthwhile, liquidate-able assets are “stored” until liquidation.  In a Chapter 13 bankruptcy the trustee sets up the payment plan for the debtor.  Prior to the 341 hearing the trustee will peruse the debtor’s filing packet in preparation for the hearing.  While going through the packet, the trustee will make notes of questions to ask the debtor in the hearing, as well as additional information and reference material about the debtor’s financial past and current situation.  People who have experienced bankruptcy and lawyers who are experts in FBL, and even trustees themselves state that in general three to six months pre-bankruptcy information is what the trustee will or might request.  This does not prevent the trustee from asking for information farther back, say for what a particular creditor gave the debtor in writing about how an account or loan or whatever was supposed to work, what the debtor had to do, what the creditor had to do.  It is rare, but it does happen.  If the trustee suspects fraud, or wants to insure him or herself in what is presented and possibly in what is not presented in the filing content, the trustee can request information from some years in the past.  Again, it is rare but it can occur.  The trustee checks bank records for the types of monies that go into a checking and or savings account, what the sources of the monies are, and trace to how the monies are spent.  There are rules and laws, federal and state, meant to insure that the debtor is not misusing the law.  There are noted situations where the trustee required a debtor to return some recently purchased items that the trustee suspected was to “run up” a credit card or account, abusing the protection of FBL.  The monies from the returns were seized for the bankruptcy estate as a penalty for the abuse.  The debtor was rather lucky because the trustee had the option of just dismissing the bankruptcy out of hand.  It has happened many times, much to the chagrin of the various people who related their experiences.


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