Trustee AUDIT on High Income Earner and 341 meeting

[BenzUp]

Hi all,

About a month prior to my 341 meeting, my lawyer received a letter from the Dept. of Justice indicating that my Ch. 7 petition was being audited. It contained a page and a half of requests. I have since found out that this appears to be happening to other people with high incomes (understandably). I scrambled to get all the information together and within 72 hours it was forwarded to the trustee's office. I heard nothing further -- until my 341 meeting...

At my 341 meeting, a person appeared who I originally thought was a creditor. As I sat down to answer the trustee's questions (they were very basic questions because...) he introduced the other person - from the trustee's office who had some follow-up questions on my audit responses I submitted a month earlier. The two of us along with my attorney went to a separate room. Neither of us saw this coming! The questions were merely clarifications and one correction on materials previously requested plus some additional explanations of my insurance and autos.

Now I am waiting along with everybody else for the 60 days to run out. I'll post any follow-ups from the audit if anything else arrises.

[Dst1]

My understanding is that audits are completely random and do not reflect the wealth of the individual.

Note that these are audits are different from cases when the trustee thinks fraud might be involved.

[justbroke]

There are two types of audits. One is of the random variety. The random audit is done by a third party on behalf of the Justice Department. The other audit, is the OUST (Ofice of the United States Trustee) audit. This one is done on the whim of the UST. They can audit anyone's filings that they chose.

You see, the former audit variety, is compulsory and the OUST has to perform a certain percentage of case audits. They have been very bad at doing this, as they were to do at least 1 in 250 cases. For a while, they weren't doing them, but seem to be back to the third party audits. This variety, random and compulsory, is almost always performed behind the scenes and no one would ever show up at your 341 Meeting.

As for the latter audit, the ad hoc variety, this is generally where the UST feels the need to question things on the petition. It's still, usually, not any indication that you did something wrong, but is yet another tool in the OUST's toolbag to ferret out those people who shouldn't otherwise receive a discharge. I see the UST using this audit type for over-the-median, high income, and large unsecured debt filers because that's where he's more likely to catch people. The UST can't audit everyone, as that would bring the system to a halt, so the UST picks and chooses.

If all your paperwork and supporting documentation are flawless... so shall your audit be.

[BenzUp]

My lawyer had another client (soon after me) who is being audited. He falls in the $150K range. He read a paragraph for me which stated the percentages of audits and it actually had an update that included filers making over $100K and their percentages for audit were in-deed higher. Uncertain - but this could vary by state <?>. I'm in California.

[liboton21]

I was audited by OUST prior to 341 as they saw my salary statement of high income (103 range) and only show one child. My lawyer just explained the back pay was not included in the 6 mos look back. Plus lawyer calculated including the back pay still no presumption of abuse. We just have to amend the schedule and so far no more issue with OUST.

[lookingforward]

We were audited by the US Trustee also. They questioned the fact that our business was making alot more money a few years ago than it is now. My lawyer, bless him, never even told me. He handled the whole thing and only told me at the 341 that it was all over and that the UST had withdrawn any objections. If I had known I probably would have to have been hospitalized. Did I mention how much I love my lawyer? Worth every penny of the 1400.00 I paid him.