Audit Questions

[InSeriousDebt77]

After speaking with my attorney yesterday, it is highly likely that my case will be an audit case, given my high income\high debt ratio.

When your case i audited, what are some of the items the are look for, as far as documentation goes? I don't have many receipts, but since I used my bank card or credit card (up until a few months ago anyways) for just about every basic living expense, would bank statements suffice?

also, it has been over 6 months since my last cash advance. I know that falls outside of the 70/90 rule, but can a US Trustee look at that as "abuse" during an audit?

Thanks

[getouttadebt]

I am also high income\high unsecured debt. Things were going fine for me until last week. Had a pretty easy 341 and declared No Asset the very next day. Then, 12 days after the 341, I got the Statement of Presumed Abuse from the UST. Don't know why for sure, but the UST has 30 days to file a motion. If you have nothing to hide, then you probably have no worries. I am no expert, but I think they do scrutinize high income petitioners much more closely. Again, if you have nothing to hide, then don't worry too much.

Good luck,
getouttadebt

[billybob37]

When we were audited we had to send in 6 months of bank statements, 6 months of paystubs. They will do an asset search, making sure you are not hiding any bank accounts or other assets. We did not have to show any kind of receipts.

[BKOnce]

Make sure to cover your ass by having lots and lots of.. DOCUMENTATION!.. and be PREPARED to answer any tricky questions.

[diviaruba]

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. 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 or she 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.

[woohoogirl]

FYI
From the US Trustee Program at http://www.usdoj.gov/ust/

[diviaruba]

Those are the "independent" audits, done by outside accounting firms. The "in-house" UST program to audit filers is still very much alive.

[woohoogirl]

Those are the "independent" audits, done by outside accounting firms. The "in-house" UST program to audit filers is still very much alive.

Thank you for pointing out my error. I think when most people think of audit, they are thinking of the 1 out of 250 selected for a random audit or the "independent" audits done by "outside" accountants. I am well aware that the "in house" audit are still round.

[ssdsco]

After speaking with my attorney yesterday, it is highly likely that my case will be an audit case, given my high income\high debt ratio.

When your case i audited, what are some of the items the are look for, as far as documentation goes? I don't have many receipts, but since I used my bank card or credit card (up until a few months ago anyways) for just about every basic living expense, would bank statements suffice?

also, it has been over 6 months since my last cash advance. I know that falls outside of the 70/90 rule, but can a US Trustee look at that as "abuse" during an audit?

Thanks

[BKSorrow]

Loan documents

During audits has anyone been asked for documents relating to their home loans? Applications, deeds, escrow papers??

[Help!]

During audits has anyone been asked for documents relating to their home loans? Applications, deeds, escrow papers??

Hi... I posted a comment about this on your blog. There were a few debtors at our second 341 hearing that were requested to provide loan documents. I know you're concerned that they're asking because they want to investigate you, but hearing the trustee's comments at our 341 hearing it became apparent that they are looking into predatory lending. Anyone surrendering a home was asked about their primary mortgage, if they had a HELOC, who the company was, and how long ago they initiated the loan. At our first 341 (after we were asked the same questions), he said, "okay, just trying to get an idea of what's going on out there with these mortgages." He asked an attorney for another debtor, "Do you think we have some predatory lending issues here?".

If you look further into the US Trustee program, you'll see that they follow BK cases and look at both the debtor and the creditors. I know it is hard not to believe that everyone is out to get you (been there!), but you are most likely being asked to produce this documentation so the UST can have a closer look at the mortgage lender, not you.

You mentioned that the loan was initiated ten years ago, right? How would anyone know exactly what your income was 10 years ago?

I've seen some cases where either the UST or a creditor was able to show that the debtor obtained credit through fraud. The outcome was that the debtor was unable to discharge that particular debt. I don't think an overstatement of income constitutes "willfull, malicious intent to defraud", especially when payments have been made for so long. My two cents...

[sisterfunkhaus]

I don't get why we weren't audited. We have $250,000 in debt including student loans. $100,000 of it or so is consumer. AT the time, we were around $48,000 per year with few assets. I thought for sure that we would get a audit but did not.

[halloweendmb1]

is 6 months all they really ask for? I would think it would be years with

What if you have lots of debt but well below median income?