By William Waldner, Esq.
Short answer: yes. If you file bankruptcy in New York City, part of the bankruptcy trustee’s job is to review the information in your petition, and your bank accounts are squarely part of that picture. Here is what the trustee is actually looking for, how far back they can reach, and how to walk in prepared rather than surprised.
What the Trustee Is Looking For
The trustee reviews your bank statements to confirm the story your petition tells. They are checking three things in particular: whether you bought valuable assets that could be sold to repay creditors, whether you moved money to friends or family before filing, and whether your account balances on the filing date match what you swore to under oath. That review continues at your 341 meeting of creditors, where the trustee questions you directly.
How Far Back Can the Trustee Look?
Two different timelines matter here. The federal power to undo a fraudulent transfer under 11 U.S.C. § 548 reaches back two years before your filing. But through 11 U.S.C. § 544, a trustee can also step into a creditor’s shoes and use New York’s own transfer laws, which reach back further — which is why trustees in New York routinely request several years of bank records, commonly up to six. In a typical Eastern District of New York Chapter 13 case, a trustee may want only your last six months of statements to confirm your income against the means test. In others, they dig much deeper.
We once had a client who had sold her home for more than a million dollars just over six years before filing. Because there were no debts on the property, the trustee traced that money carefully to see where it had gone. She was fine — but had she given a chunk of it to a relative within the reach-back window, that relative could have been sued by the trustee to claw the money back. You are generally free to spend your own money before bankruptcy; gifting or transferring it to someone else is what draws scrutiny.
You Cannot Simply Leave It Out
There is no hiding here, and no upside to trying. It is your responsibility to provide the bank statements the court requires, and failing to produce or keep proper records can get your case dismissed for failure to maintain records. Concealing an account or a transfer is far worse — that is the territory of bankruptcy fraud, which can cost you your discharge and carry criminal exposure.
The Good News: Exemptions Protect Most of It
A trustee reviewing your accounts does not mean the money is gone. Under New York and federal law, much or all of an ordinary bank balance can be protected under New York’s bankruptcy exemptions. Because a large balance sitting in the account on your filing date can eat into those exemptions, it is often wise to keep accounts low right before filing and, just as important, to talk through any recent or planned transfers with your attorney first. Getting the timing and the paperwork right in a Chapter 7 bankruptcy is a big part of what protects your money.
Worried About What Your Statements Might Show?
Law Office of William Waldner — 469 Seventh Avenue, 12th Floor, New York, NY 10018 Call 212-244-2882 to schedule your free, confidential 20-minute consultation. We handle bankruptcy cases exclusively, in the Southern and Eastern Districts of New York.
