Bankruptcy Audits Are Back

Bankruptcy audits are back, and it’s best to be prepared.
When you’re filing for bankruptcy, the amount of paperwork required can seem onerous. It’s already a stressful time, and finding and organizing so many records and receipts can be difficult. It might feel like Attorney Wagman is making too many demands and requiring proof of too many details.

Trust him on this one.

Just like the Internal Revenue Service can audit your tax returns, the U.S. Trustee’s office can audit your bankruptcy filing. In 2005, random audits became mandatory. The audits were briefly, temporarily suspended, but they’ve returned. And it’s important to be ready.

The U.S. Department of Justice contracts with accounting firms to perform independent audits. These auditors can require copies of any records which could be used to verify the information you provided on your bankruptcy filing. If you’re audited and the numbers you supplied can’t be backed up with paper evidence, your bankruptcy could be dismissed.

Auditors pay particular attention to the means test form and your income/expense reports, and therefore they frequently require:
Tax returns, with all supporting materials, for the two years prior to your bankruptcy filing;
All paystubs for the 6-month period before you filed; and
All bank account statements for the 6 months before you filed.

Make sure you’re prepared for a complete and accurate bankruptcy filing, as well as a potential random bankruptcy audit, by bringing in all the paperwork Attorney Wagman requests.


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