When you file for Chapter 7 bankruptcy, you are required to surrender any nonexempt property to your trustee, who could then sell it and distribute the proceeds among your creditors. Therefore, many people worry that the trustee may come to their home to inventory everything, distressing the family, and catching the attention of neighbors.
While it’s highly unlikely that a trustee will come to your house, it can happen if your bankruptcy case attracts attention for any reason. When determining whether you have nonexempt property, your trustee will rely primarily on these three sources:
- Financial documents like bank statements, pay stubs, and tax returns
- The bankruptcy schedules and statements that you complete
- Your testimony at the 341 hearing, also known as the meeting of creditors
If your trustee believes that there are discrepancies in any of the information you have provided, then they may question you further or request additional documentation. They could also carry out an independent investigation, but this is usually done by scrutinizing your financial and property records and public databases more closely. You likely won’t have to worry about them doing a personal inspection unless one or more of the following circumstances apply.
Your home is in bad shape
If your home is not protected by an exemption and its poor condition affects its fair market value, then the trustee might visit the property and assess the damage to get an idea of how much it might be worth in its current state.
You rent storage space
If your expenses include storage space rental, then you can expect the trustee to ask you what you’re keeping there. If you say that you’re storing old clothes, holiday decorations, or toys that your kids outgrew, then they may accept that answer- or they may not, especially if you’ve reported high-value furnishings in your home.
You’ve been accused of fraud
If someone who is in a position to know about your finances, then such as a former spouse or business partner, reports that you are concealing assets, your trustee could show up at your house to inventory the contents, but they won’t simply arrive unannounced. Your bankruptcy attorney will be notified and help arrange a mutually convenient date and time.
You’ve been selected for an audit
The United States Trustee audits a small percentage of Chapter 7 and 13 bankruptcy cases every year. Some are chosen randomly while others arise when the filer claims expenses or reports income that trigger red flags. These audits don’t usually involve home inspections, but it could happen. Should your trustee decide that a home visit is in order, your New York bankruptcy attorney will ensure that your rights are protected and prevent any unintentional reporting mistakes from hindering your future discharge.
If you are considering filing for bankruptcy, then call 718-514-6619 to set up an appointment with Jayson Lutzky. Mr. Lutzky is a highly experienced Bronx, New York personal bankruptcy lawyer. He offers free initial in-office consultations.