DO BANKRUPTCY TRUSTEES MONITOR YOUR CHECKING ACCOUNT ACTIVITY?

Asked over 1 year ago - Canoga Park, CA

When you file Chapter 7 does the bankruptcy trustee monitor your checking and savings account activity? Do they know when and how much you deposit/withdraw/pay each day? Do they control your bank accounts and if so for how long?

Attorney answers (6)

  1. Michael J. Ireland

    Contributor Level 12

    2

    Lawyers agree

    Answered . As other learned attorneys have said, the answer to your exact question is GENERALLY NO, trustees do not monitor Chapter 7 bank accounts (the answer is different for Chapters 11 and 13). Chapter 7 trustees NEVER control a debtor's bank account (the answer is different for Chapter 11).

    However, a Chapter 7 Trustee COULD and WOULD ask for bank statements if they had reason to believe someone was being less than honest. The Trustee has the right to request bank statements for periods before and after the case was filed to verify statements and estimates made on the petition and schedules. Moreover, the FBI investigates allegations of bankruptcy fraud and they certainly have the power to obtain bank statements directly from the banks, when warranted.

    It is common in Woodland Hills to be asked for 3 or 6 months of prepetition bank statements.

    As another attorney pointed out, why are you so worried? If you are planning something underhanded, just DO NOT DO IT. If you are just paranoid or unfamiliar and speculating out of idle curiosity, I hope we have satisfied your curiosity.

    Good luck.

    If you need further clarity, please email me at MICHAEL@MIRELAND.US Answers to questions are for general... more
  2. David Patrick Farrell

    Contributor Level 11

    1

    Lawyer agrees

    Answered . Not to my knowledge. You do have ongoing disclosure obligations in bankruptcy.

  3. Ryan Cullen Wood

    Contributor Level 6

    1

    Lawyer agrees

    Answered . Yes, no or maybe. In the Bankruptcy Court for the Northern District of California there are a number of Chapter 7 trustees that require the bank account statement that encompasses the date the bankruptcy petition was filed. One requires three bank account statements. If they ask the bank account statements for the six month period prior to the filing of the case you will need to turn them over. So do Chapter 7 trustee's actively or have the means to monitor your bank accounts? No. Can they request bank account statements. Absolutely. If you refuse to turn them over will the court make you turn them over? Most likely.

  4. Derek R. Caldwell

    Pro

    Contributor Level 19

    2

    Lawyers agree

    Answered . Where I practice, no. You may have to provide several months worth of prior account statements, depending on the trustee assigned to your case or possibly to the US Trustee or, as in my state, the Bankruptcy Administrator. You are obligated to provide the trustee and the court with accurate information and lying on your petition and schedules is a felony punishable by up to 5 years in prison, a $500K fine and denial of discharge.

    DISCLAIMER: This message is intended as a general discussion of legal issues and not as a statement of fact, legal... more
  5. Dorothy G Bunce

    Pro

    Contributor Level 20

    2

    Lawyers agree

    Answered . Technically, I suppose the bankruptcy trustees could do this if they felt that something fishy was going on, but like most of us, they only work as hard as they need to and usually rely on the documents you are required to provide to them, which includes your bank records.

    Hope this perspective helps!

  6. Matthew Scott Berkus

    Contributor Level 20

    2

    Lawyers agree

    Answered . Generally, chapter 7 trustees do not monitor your bank accounts after the filing of your case. However, as others have pointed out, they "could," but doing so is not common practice. The trustee will ask to see your bank statement that covers the timeframe just before and just after your filing date.

    However, you wouldn't want to have any innocent, albeit abnormal, transactions take place during the bankruptcy. Generally, once the bankruptcy is discharged and closed, you can do whatever you like.

    I'd be remiss if I didn't point out that these sorts of questions raise red flags. The obvious question is, "why do you care?"

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