U.S. Trustee Audit
Under the current Bankruptcy law, the U.S. Trustee’s office will do random audits of Chapter 7 and Chapter 13 bankruptcy cases. They have hired auditing firms to handle the audits and write a report regarding the findings. The auditing firm will send a letter requesting documents from the Debtor to perform the audit. The documents consist of things such as 6 months pay stubs, 6 months bank statements with written explanations of deposits over $500, credit card statements, tax returns, and any other documents that could be helpful in them making sure the paperwork that was filed with the court was accurate.
Once the audit is done a report will be submitted to the U.S. Trustee’s office. In most cases the report comes back that there were no material misstatements. One of my clients filed a Chapter 13, and his case was chosen for an audit. We sent him letters and attempted to call, but never got a response. Since he never turned any documents over to the auditing firm, they were unable to perform the audit. If a Debtor refuses to cooperate with the audit, the U.S. Trustee will file a Motion to Dismiss with Prejudice. There is a hearing so if the Debtor has a good excuse for failing to cooperate he will have the opportunity to explain it to the Judge. In most cases the case will be dismissed and the Debtor will not be able to file another bankruptcy for at least 180 days.
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