US Trustee Review Questions

[cw99]

I'm glad that after your initial interaction with them, that it worked out well for you guys. Maybe there is hope for us yet. With the constant worrying and document gathering for both this and the attempt at modifying our loan with the mortgage company, I barely have time to get work done. They want to know what's going to change in the future...that would be that I should actually have time to sell something and make some commission when I'm done with this.

[blockhead]

As someone who got audited by the US Trustee I know how stressful it is. I delivered to them a whole box of bank statements, cancelleced checks, lease agreements, insurance pols, you name it - they wanted it - along with an affitdavit in response to a lot of detailed questions. After about 6 weeks of worrying myself to death, my attorney called and said the UST had spoken to him and said that "all was what it should be". After that the Ch7 trustee 'sprang' back to life (sluggishly) and I got a discharge for about 280k of CC debt once the extenstions expired (Ch7 kept getting extensions in case UST filed something). It's worth noting (and I checked this out at the time on the UST site or affiliate of) that while chance of a true random audit is low, the ones that are not so rare are 'highly detailed info requests' from the UST office and which are often not accompanied by any formal filings to the court (unless they decide to object). These are far more common. They hit you right at or after the 341 and give you a couple weeks to come up with all the stuff.
Then they have to object within 60 days of the 341 (or soon after with a suitable excuse says my attorney, for those sweating it).
My atorney said with high CC debt like that, and with a closely held C-Corp, the chances of an audit of this nature were very high, that UST had to report on cases with high debt.

Anyway, just have to hope for the best, put up a great affitdavit if called for, and make sure documents are in line, then pray :-)

[cw99]

Thank you soooo much for responding. We knew to expect it to some degree because of the c/c debt and the fact that it was more complex due to my business as a sole proprietorship being intertwined. It's good to hear that if we give them what they are looking for (and in detail...already at 300 pages apparently) that we can possibly come out of this okay. Glad that it all worked out for you. Hoping to have everything over to the attorney (round 2 of requests that came up at the 341) by the end of next week. Crossing fingers that this will be everything he is looking for and our answers and documentation satisfy him enough to withdraw his potential objection and close the audit.

[BKHELP138]

"Information on Debtor Audits
Individuals who file for relief under chapter 7 or chapter 13 of the Bankruptcy Code are subject to audit. At least one out of every 1,000 individual chapter 7 and chapter 13 cases will be randomly selected for audit. In addition, a case may be selected for an exception audit (audit of a case with income or expenditures above a statistical norm).
The audit involves the verification of the income, expenses, and assets reported by a debtor in the bankruptcy schedules and statements. A debtor is required to provide some additional information and records, and to cooperate with the audit firm and provide this information promptly. There is no cost to a debtor for the audit, except for the cost of making copies of documents needed for the audit. The information that a debtor provides in connection with a case is subject to examination by the Attorney General or his designee.
The audit firm will file a report containing the results of the audit. If the audit firm finds material misstatements of income, expenses, or assets, the clerk of the bankruptcy court will notify the debtor=s creditors. The report is not a legal determination, and the legal effect of the auditor=s finding of a material misstatement is a question for the court.
By statute, debtors are required to cooperate with the audit firm. Failure to cooperate with the audit firm, or failure to adequately explain to the bankruptcy court any material misstatements contained in the audit firm=s report, may result in the dismissal of the case or the denial or revocation of discharge, and, possibly, in referral of the matter to the United States Attorney for criminal investigation."