San Diego Bankruptcy Audits
In 2005, the Bankruptcy Laws were amended under BAPCPA and one of the new requirements are random audits. These happen in about one of every two hundred fifty cases (1/250). So the chances of audit are small, less than 1/2 percent. But they do happen and are overseen by the United States Trustees Office.
In most cases it is not an indication that there are any problems or concerns with the case. These audits are usually totally random. So there is no need to be worried or upset!
Procedurally, an audit firm will be selected to review the case. They will review the information provided in the petition and schedules filed in the case; and they may request additional documents or information.
A Debtor MUST fully cooperate with the audit firm and promptly provide any additional information and records requested by the firm. A Debtor has 21 days to send any requested items to the audit firm.
In a typical audit, the audit firm will verify the income, expenses, and assets in the bankruptcy schedules and statements. There should be no costs for the audit. Other than copying documents that the audit firm requests. The audit firm is looking for any material misstatements of income, expenses, or assets. Some examples of material misstatements include hiding assets and making false statements to the bankruptcy court. The audit firm has 21 days to complete the audit and submit its report or a “Report of No Audit” with the court. The auditing firm’s report details the findings of the audit. The report is not a legal determination. It’s up to the bankruptcy court to review the findings and determine if the debtor made material misstatements on the petition.
Again, most audits are completely random and not indicative of any “red flags” or particular information in the bankruptcy case. The United States Trustee is required by law to randomly audit a particular number of cases each year. So long as all the requested information is provided, the audit will not significantly delay discharge.
Written by Michael G. Doan–
Owner of the Oceanside Bankruptcy Attorney office, Michael not only manages his business, but is also a highly skilled San Diego Bankruptcy Attorney with over 20 years of experience. He specializes in many fields, such as: insolvency, bankruptcy, consumer rights, debt negotiation, creditor collection abuse, estate planning, contracts, real estate, and tax. Michael is currently concentrating his practice solely in Bankruptcy Law and is a Board Certified Specialist in Consumer Bankruptcy Law by the American Board of Certification, one of only fourteen such attorneys in all of California. Mr. Doan also practices on the cutting edge of bankruptcy law, and was the first attorney in the entire Southern District of California to file the very first Chapter 7 Bankruptcy and very first Chapter 13 Bankruptcy under the new Bankruptcy Laws which went into effect on October 17, 2005.
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