Chapter 7 Trustees and Your Bank Account | Free Consult (2024)

Your Chapter 7 bankruptcy trustee will likely check your bank accounts at least once during the process of overseeing your filing. They have a right to perform a full audit of your accounts or check them any time it is necessary. However, it is rare for them to keep close tabs on every account.

In most cases, your bank account trustee will generally look at your account balance on the filing date of your petition to ensure it matches the information submitted. This is a normal part of administering a Chapter 7 case in North Carolina.

The Trustee Will Likely Look at Your Account to Verify the Petition Is Correct

Even when an exemption covers the cash in your checking account, the trustee may want to take a closer look at your banking history or current use. Doing so is allowable and could involve a general overview or an in-depth review of your recent activity.

It is crucial that you know and report the following:

• What is in your bank account
• How much you are depositing, such as from direct deposits
• How many active automatic payments come out
• If you owe any debts (such as loans) to the banking institution
• That your account may be frozen

If they freeze your account, you may be able to speak with your bankruptcy lawyer or the trustee to gain access to your money. However, you should have a backup plan in place in case this takes a few days.

So what happens to your bank account when you file Chapter 7?

For the most part, nothing will change, but you’ll want to be sure you disclose all of them to your creditors. While your Chapter 7 trustee may not have the time or the need to watch your bank accounts closely, they will if they believe there is suspicious activity.
You should always be truthful to the trustee and in all your paperwork. If you have concerns or are unsure how to complete the petition accurately, you can contact a bankruptcy attorney for help.

If the trustee believes you are hiding income, assets, or additional accounts, they will take steps to uncover them. Violating federal bankruptcy law could have significant consequences. Specifically, committing perjury by lying to your trustee or on your petition calls for severe penalties under 18 U.S.C. § 152(3), including:

• Prison time
• Large fines
• The loss of your bankruptcy discharge
• Restitution to those impacted

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What If They Audit My Chapter 7 Bankruptcy Case?

Federal law instructs bankruptcy trustees to audit bankruptcy filings and their supporting documents:

• Randomly; and
• If there is a reason to believe the information may not be accurate or true

If this happens to you, you may want to reach out and enlist the help of a bankruptcy attorney. Our team can help you provide any additional documents, represent you to the trustee and others, and protect your rights.

It is important to remember that a case audit does not mean you did anything wrong. However, it is essential to cooperate and provide any paperwork or information requested during this process. The trustee will ensure your bankruptcy schedules match your banking records and other documents before allowing your case to move forward. This should not be a difficult or stressful process, assuming you provided the correct information.

How an Attorney Can Help with Your Chapter 7 Bankruptcy

A Morganton bankruptcy lawyer from our firm can represent your best interests, helping you make the right decisions and provide the necessary documentation to get your debts discharged. They can also take steps such as:

• Documenting any non-exempt assets
• Helping you retain your car, home, or other assets
• Determining which debts qualify for discharge
• Representing you to the trustee, creditors, and court
• Answering questions about the bankruptcy process or your specific case
• Addressing any major concerns you have as the case moves forward
• Offering advice on investments and purchases before, during, and after bankruptcy

You can learn more about how a bankruptcy lawyer can help you with your petition by connecting with our law firm today. We will explain our services, fee structures, and more. Our firm represents individuals and families filing Chapter 7 or 13.

We also handle Chapter 11 reorganization and Chapter 12 for family farmers. We can help you determine which, if any, of these options is best for you and your family.

Reach Out to Our Team Today in North or South Carolina

At Farmer & Morris Law, PLLC, our team is here for you during this challenging and stressful time. Even with resources from the U.S. Courts, U.S. bankruptcy law is complex to navigate alone. We leverage our knowledge in this area of law to help our clients discharge their unbearable debts.

We have multiple locations throughout North Carolina, with our main office located in Rutherfordton and an additional office in Spartanburg, SC. You can learn more about our team and the services we provide now by dialing (828) 286-3866. We have someone who can answer your questions today.