Talking About Filing Bankruptcy

When people file for bankruptcy, one common concern is the bankruptcy trustees will come to their homes to verify the information on their bankruptcy schedules is correct. The bankruptcy court functions on an honor system that assumes you're being truthful about your assets and debts; so, generally, the trustee won't bother confirming the accuracy of your claims in person. However, there are times when the trustee will perform a home inspection. Here's more information about this possibility.

Why the Trustee May Do a Home Visit

Typically, the bankruptcy trustee may opt to do a home visit if the petitioner's paperwork or claims gives him or her cause for concern. For instance, sometimes people will value their assets in a haphazard manner, resulting in amounts that don't make logical sense given other factors such as income. Since the amount of the payments to creditors is based on the value of the debtor'' bankruptcy estate, the trustees in the cases may do home evaluations to obtain a more accurate estimation of the petitioner's assets.

Another reason a trustee may do an onsite inspection is if he or she suspects the debtor is hiding assets or committing fraud of some kind. The trustee may come to this conclusion after assessing the person's paperwork. For instance, the trustee may question the validity of a person's claims if his or her schedules show a high income and a large amount of credit card debt but very little assets.

However, sometimes a trustee will receive letters from the petitioner's friends, family members, enemies, or creditors stating the debtor is misrepresenting his or her assets. Since it's the trustee's job to verify the petitioner's estate, he or she might do a site inspection to determine if the debtor is being truthful. If the trustee does find out the debtor has been less than honest, he or she will file a motion with the court to sanction the debtor and/or take possession of non-exempt property that was being concealed.

Avoiding a Home Visit

Home inspections are not common, and you can easily avoid them by being honest and accurate when filling out your paperwork. While the court is typically forgiving when debtors make honest mistakes on their schedules, the judge and trustee won't hesitate to bring criminal charges against a person if they feel a debtor is actively engaging in fraud.

If you're having trouble valuing your assets, it's best to enlist the assistance of an experienced bankruptcy attorney who can help you determine the right amount or locate experts that can do a proper appraisal. For more information about this issue, contact an attorney in your area.