Trustee Blog

11 U.S.C. 727(a)(3) and (a)(5) request for information

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Request for Books and Records and Explain what happened to the money received from the extension of credit.

Recently there was a case in front of Riverside Chapter 7 Trustee Charles Daff in which the debtor had incurred more than $300,000 in credit card debt. When asked by the Chapter 7 Trustee “what the Debtor did with the $300,000?” The Debtor could not answer with a specific answer. Mr. Daff spent several minutes asking questions of the debtor. Mr. Daff said that he did not have any more time today to ask the Debtor question, so he continued the hearing and said that he would send him a letter asking for the books and records to show what the $300,000 was spent on under 727(a)(3) and (a)(5).

Below is 11 U.S.C. 727 Discharge which points to what the Trustee was going for in asking for the information:

(a) The court shall grant the debtor a discharge, unless—

(3) the debtor has concealed, destroyed, mutilated, falsified, or failed to keep or preserve any recorded information, including books, documents, records, and papers, from which the debtor’s financial condition or business transactions might be ascertained, unless such act or failure to act was justified under all of the circumstances of the case;…

(5) the debtor has failed to explain satisfactorily, before determination of denial of discharge under this paragraph, any loss of assets or deficiency of assets to meet the debtor’s liabilities;

So Trustee Daff wants to find out if the Debtor is entitled to a discharge and he does that by finding out what happened to the monies received in gaining $300,000 in credit.

Practice Pointer:

In order for a Debtor to obtain a Discharge, the Debtor must keep accurate books and records to explain how the monies were spent. If the Trustee does not receive the requested information, then the Debtor may not receive a discharge.`


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