Trustees in CA

[humrc]

I have finally retained a lawyer. She didnt seem at all concerned with my preferential payments and my "small" IRA withdrawal (8000). Basically told me that we are far below the limits on the means test and the dollar amount of the payments is too low to worry about. All i had to provide was my tax returns and current pay check. No bank statements at all.

My questions are:
1) Was this normal for her to not ask for any other docs?
2) I am about 29K below the means test, could this be as hassle free as she is expecting? Is there a chance they will not even bother to deep into my financial history?
3) What do the trustees in CA look at after I file? and after a 341?

Thanks for the help!

[sunshinepa]

It is unusual for an attorney not to ask for bank statements. Not sure about the preferential payments as you don't say how much, when etc. If you are that far below median, the withdrawal probably doesn't have a big impact.

Being that far below the median income is a plus! Hopefully they will not scrutinize anything deeply. Mine did not, never even looked at my bank statements here in PA. Not sure how they work in CA. If they want anything further, you should know at or before the 341.

Good luck.

[humrc]

The payments were about 400 with a check. But was inconsistent with them. It seems like that is what she is counting on, no deep investigating. Anyone know how deep do they dig in southern CA?

[debee]

I have finally retained a lawyer. She didnt seem at all concerned with my preferential payments and my "small" IRA withdrawal (8000). Basically told me that we are far below the limits on the means test and the dollar amount of the payments is too low to worry about. All i had to provide was my tax returns and current pay check. No bank statements at all.

My questions are:
1) Was this normal for her to not ask for any other docs?
2) I am about 29K below the means test, could this be as hassle free as she is expecting? Is there a chance they will not even bother to deep into my financial history?
3) What do the trustees in CA look at after I file? and after a 341?

Thanks for the help!

The code spells out certain documents that debtors are supposed to produce (You can find them if you google "11 USC 521" and "FRBP 4002") but what the trustee wants varies by case and trustee. Some want more than those listed in the code, some less. The code doesn't require you to produce historical bank statements, but some trustees ask for them. It does specify that you produce statements showing your balance as of filing day, but not all trustee ask for that. Your lawyer will know "the norm" in your district.

If you're below median & a no-asset case going in, it is extremely unlikely that the trustee will spend time digging around in your case. They make very little on no-asset cases and don't want to make even less by spending more time than necessary on them. To start digging, something would have to trigger the trustee's interest and expectation of finding assets. (Examples would be if you had your own business, if you used to be high income, etc)

If your preferential payments were to non-insiders and did not accrue to more than $600, it isn't required that you disclose them in your bankruptcy petition. They don't matter. (Edit note: However, if they were paid in the 90 days before filing and accrued to $600 or more, then you are required to list them in your petition.)

If the payments were to an "insider" those will be listed in your petition going back a year, regardless of amount. It costs money for the trustee to go after money, so normally they only go after it when there is enough there (after subtracting their costs) to benefit the bankruptcy estate.

Also, preferences don't prevent you from receiving a discharge. The trustee can go after the money and take it from the creditor, but you will still receive your discharge for those debts.

Since you're under the median, once you file nobody's looking at anything except your filing paperwork. If the trustee says you're a "no asset" at the 341, it means he's done with you. Noone will be looking into your affairs after filing, after the 341, etc. There are some random audits - if you end up being one of those, you will be asked to produce documentation to substantiate the claims made in your petition. I think it's something like 1 in 1000.

[angles]

In our case (in CA) they did not ask for any documentation other then two years of our tax returns and a recent pay stub. We did keep 6 months worth of bank statements and of course kept a copy of our bank statement the day we filed just to be safe. We also printed out the BB value of our vehicles and gathered any other documentation we felt might be needed just in case the Trustee asks for it or if questions arise. Our attorney made a comment one time about all the paperwork we had acquired to substantiate our financials. So to answer your first question it does not seem unusual they only asked for tax returns and paychecks.

Just to give you a heads up, at our 341 we had to fill out and sign a supplemental sheet asking us if we paid anyone or transferred any assets greater than 1600 in value within the previous 6 months. Although it seems that in most parts of the country 600 dollars is the trigger limit here in Kalifornia the amount seems to be higher, which could explain why your attorney was not concerned.

[debee]

Although it seems that in most parts of the country 600 dollars is the trigger limit here in Kalifornia the amount seems to be higher ...

I can see why it seems that way, but in fact it's $600 everywhere in the country. Everyone who files Ch7 has to fill out certain forms one of which is the Statement of Financial Affairs (SoFA/ Official Form B7).

Question 3 of SoFA states:

"List all payments on loans, installment purchases of goods or services, and other debts to any creditor made within 90 days immediately preceding the commencement of this case unless the aggregate value of all property that constitutes or is affected by such transfer is less than $600 ..."