During a Chapter 7 bankruptcy cases, all of the property in the debtor’s possession is part of the bankruptcy estate. If there is estate property that is not exempt from collection, the bankruptcy trustee may require turn-over the property to pay creditors. Therefore, it is extremely important to accurately identify all of the debtor’s property and its status prior to filing a bankruptcy case.
One situation that can cause problems in bankruptcy is misrepresenting the actual balances in a checking account on the day the bankruptcy is filed. If the debtor is unable to exempt the cash balance in a bank account, the trustee may require its turn-over, even if the cash is subsequently spent.
Preventing any problems is simply a combination of good bookkeeping and good communication. Obtain your actual bank balance and account for any direct deposits, pay checks and any outstanding checks and provide this information to the attorney when filing.