Chapter 7 BK Bank Statements

[kingmartin06]

II'm just curious as to why my lawyer is only asking for 3 months worth of financial statements, won't the trustee dig further back then that? My plan is to file in November so that my bonus from work won't be included in the means test that I got in march.

[justbroke]

The base requirement is 3 months of statements. If the Trustee believes that there is something more to examine, wants to look further back, or is interested in something in your Statement of Financial Affairs, then the Trustee "may" request more. I was not required to provide more than 3 months since my petitions were very thorough (as the Trustee noted).

If you receive bonuses annually and they are similar, then the Trustee will be able to see your annual income from your Tax Returns. This is the primary source for the Trustee to determine income. The other source is to look at banking statements.

[kingmartin06]

The base requirement is 3 months of statements. If the Trustee believes that there is something more to examine, wants to look further back, or is interested in something in your Statement of Financial Affairs, then the Trustee "may" request more. I was not required to provide more than 3 months since my petitions were very thorough (as the Trustee noted).

If you receive bonuses annually and they are similar, then the Trustee will be able to see your annual income from your Tax Returns. This is the primary source for the Trustee to determine income. The other source is to look at banking statements.

So based on the tax returns, would it be possible that they would force me into a chapter 13 even though based on the 6 month look back I would be below the median income

[justbroke]

So based on the tax returns, would it be possible that they would force me into a chapter 13 even though based on the 6 month look back I would be below the median income

I can't predict whether the Trustee will care. The Trustee will certainly use your prior tax return to determine your average weekly/monthly pay. While the Means Test looks back only 6 months, the Trustees typically look to the tax refunds specifically to see if there is a difference. The Trustees also use the tax returns to determine if there were any refunds and whether those refunds were included in the calculations.

No one can force you into a Chapter 13 since a Chapter 13 is voluntary. If the Trustee determines that you have enough income to pay the unsecured creditors some sort of dividend, then the Trustee would seek dismissal (you would be allowed to convert to a Chapter 13 rather than face dismissal).

Here's the positive side to not including the bonus in the prior 6 months. When you include an annual bonus in the 6-month lookback, the bonus is only spread over 6 months. So a $1,200 bonus looks like you make an extra $200/month which could lead to a Chapter 13 conversion. If the bonus is not in the lookback period of 6-months, yet shows in the annual income (tax return), then you would average it over 12 months, making it only a $100/month in extra income.

Trustees are very smart and they know that people delay filing so that something "falls off" the 6-month lookback.

If you are very close on your Means Test, then you (and perhaps your attorney) need to find better defenses. For example, if the bonus was a one-time thing, doesn't happen often, or will never happen again, then you may be able to speak to any objection as to whether your case is an abuse. That's my experience.

[kingmartin06]

Well, I do get them every year around March. So far I have gotten them 3 years in a row, however there are discretionary and not garanteed, there is talks of little to no bonus next year. Of course that isn't set in stone. I guess I am just going to have to let the cards fall where they will regardless and live it. Thank you for your help.

[LadyInTheRed]

The fact that the bonuses are not guaranteed is very helpful.