Will a Trustee Look at My Bank Accounts if I file Bankruptcy in New York City?

If you file for bankruptcy in New York City the bankruptcy trustee assigned to your case will review the information provided in your bankruptcy paperwork to learn about your financial history.  They may look through your bank account statements to see if you have purchased any valuable assets that could be used to repay creditors, or to see if you have fraudulently transferred money to someone prior to filing your petition.  They might even look back to double check your account balances from the day you filed to see if they match what you listed under oath on your original bankruptcy petition. 

In New York City a bankruptcy trustee can look back as far as six years into your bank records, and possibly even 7 years if you sold property over six years ago.  In many cases in the EDNY (Eastern District New York) a Chapter 13 trustee will typically want only the last six months of your bank statements in order to confirm your income matches what you listed on the means test.  In other cases a trustee might dig much deeper.  We had a client for example who sold her home for over a million dollars a little over six years before she filed.  Considering she had no debts on the property, the trustee was very interested in closely tracing the money to see where it went over the last six years.  She was OK, but had she given money to a family member any time in the last six years they could have been sued by the trustee for the full amount given to them.  In the eyes of the court you can spend your money prior to bankruptcy in just about in way you wish, but if you give it to someone within six years of your filing date they could be on the hook for a fraudulent transfer.  There is really no hiding the information either since it’s also your responsibility to provide the necessary bank statements to the court.  Not doing so could result with your case being dismissed for a failure to provide or maintain records.

But there is relief.  Under New York State and Federal Law many of your assets and much if not all of your bank account balances can be exempted from your bankruptcy estate.  For this reason it is advisable to have as little in your accounts as possible before filing to avoid eating up any of your available exemption amounts.  It’s wise to consult your attorney about any possible issues with your accounts and to discuss any money transfers prior to filing bankruptcy. 

If you file bankruptcy in New York City the trustee is likely to review your paperwork very carefully in an effort to find hidden assets, fraudulent transfers and improper bankruptcy exemptions.  It’s important to work with a qualified bankruptcy attorney that can help you keep the most out of your bankruptcy estate so you may get the most out of the fresh start bankruptcy provides.   If you live in New York City and need immediate relief from your debts please contact the Law offices of William Waldner online or at 212.244.2882 to arrange a free consultation.  We only practice bankruptcy law and maintain a 99% Chapter 7 discharge record in New York City as of 9/31/16.

This article is intended for educational purposes only.  By reading this no attorney-client privilege has been created.