Debtor
Audits in Bankruptcy
If you are contemplating filing bankruptcy or you have already filed
bankruptcy, it is imperative that you understand debtor audits. If you file a
Chapter 7 or Chapter 13 bankruptcy petition, you may be chosen for a random debtor
audit. These audits are courtesy of the Bankruptcy Abuse Prevention and
Consumer Protection Act of 2005. The audits are focused on determining the
accuracy, veracity, and completeness of the petitions, schedules, and other
information provided by the debtor.
The audits will be performed by independent firms selected by the United
States Trustee according to the standards developed by the United States
Trustee Program. The Debtor Audit Standards are posted at http://www.usdoj.gov/ust/.
Procedure
The Office of the United States Trustee will send a letter to you ( if you
are a pro se debtor - you file your bankruptcy petition yourself) or to your
attorney stating that you have been selected for an audit. The letter will also
identify the firm that will conduct the audit. The letter will also state the
documents needed by the firm for review.
You will have 21 days to provide the audit firm
with the requested documents. Once the audit is complete, the audit firm will
issue a report which must specify any material misstatements of income,
expenses, or assets that were identified by the audit firm. Before including a
material misstatement in the report, you (as a pro se debtor) or your attorney
will receive a written notice. You will be given an opportunity to provide a
written explanation for the item(s) in question.
The most important thing you can do if you are
selected for a debtor audit is to provide the most detailed and accurate
information possible to the audit firm. Take your time to understand what
documents the audit firm is requesting of you and provide them to the audit
firm in a timely fashion.
