Trustee audit documents what is the Bankruptcy Trustee looking for

You are required to furnish certain documents by law when filing Bankruptcy in Kentucky.

Trustee audit documents

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When you submit these documents to the Trustee he is looking for property he can take because you transfered it to relatives or that exceeds the exemptions which control what you can keep in a Chapter 7 or 13.


The Chapter 7 or Chapter 13 Bankruptcy Trustee is checking over documents to find income, property or transfers of property.  The Bankruptcy laws pay Trustees a small fee for every filing they review.  But the laws also pay trustees for any property they seize.     If your bankruptcy filing fails to provide an accurate and easy to understand petition the filing will cause the Bankruptcy Trustee extra work and may cause problems for the Debtor.

Here is why the bankruptcy trustee audits documents and what he looks for.

Document AuditedReason & Kentucky lawWhat to Do
Mortgages.  Homes can be taken if the Mortgage and deed is not properly or timely filed. It is rare but banks make mistakes in closing loansMortgages must be filed within 30 days after the property was purchased or 10 days after refinancing. But the trustee only has this power if the home was purchased within 90 days of filing bankruptcy.Always wait until 90 days after purchasing a home to file bankrutpcy.
Car titles Commonly taken if liens are not properly recorded or if not timely filiedIf no lien was recorded or if you bought the car within 90 days of filing bankruptcy and the lien filing was not recorded in 30 days the Trustee owns the car.Check car titles to make sure the lien was recorded.  Also check to make sure the lien filing was recorded within 30 days after you bought it if you purchase a car within 90 days of filing bankruptcy.
Bank Accounts are not often taken but Indiana only allows you 300 dollars.  Kentucky has larger exemptionsBank records may show improper payments or transfers to family members.  If you have too much  in the bank when filing bankruptcy you may lose it.Keep a minimum balance until you get a bankruptcy filing notice. However Kentucky has large exemptions and taking money in a bank account is now rare.
Tax filings Refunds are rarely taken. But they are used to verify income to force people into filing Chapter 13.  In Indiana they take amounts over 300 dollars because their exemptions are lowTaxes are used to verify income and see if you need to be in a Chapter 13.  The unearned income child credit part of your refund is a welfare benefit and not normally attachable.  The remainder of your income tax refund is an asset.Plan your tax refund and filings carefully.  If you receive a large refund you may lose it.  If you had a sudden drop in income explain it.  The US Trustee often objects to you filing a chapter 7 if you had high income and looks at deductions to find unreported or transferred property.
Paystubs Prior 6 months now required or statement from work.Test for income and whether or not you need to be in a Chapter 13
Payment history to prove expensesRecent expenses such as Charitable contributions, 401 deductions and private school expenses that were added just before filing are not allowedHigh Expenses such as 800 Per month for medicals for a family or 3 would require documentation.