Trustee Blog

Common Bankruptcy Mistakes

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Chapter 7 Trustee Karl Anderson is a longtime Riverside Bankruptcy Trustee. He serves the bankruptcy panel under the Guidance of the United States Trustee which is a branch of the Department of Justice. As such, Mr. Anderson and the other Chapter 7 trustees review the petitions for accuracy and clarity. Each of the cases is also audited by the US Trustee.

Sometimes the Trustee will ask the debtor and attorney to amend the petition for small mistakes that ultimately do not effect the outcome of the case, but ensure that the petition is filed correctly. Here are some common mistakes:

1. Using both CCP 704 and CCP 703 in the same case.

On schedule “C”, most debtors do not have much to protect. If both CCP 704 and CCP 703 are used, then the schedule is incorrect. This is usually a software problem, however it makes the Trustee ask the debtor to amend so that when the case is audited, the US Trustee will not raise the issue.

Practice Pointer:

Review the Schedule “C” to show that CCP 704 and CCp 703 are not mixed together.

2. Not listing and personal property on Schedule “B”

Sometimes a Debtor will not list any personal property on Schedule “B”. The Debtor shows up at the hearing and the Trustee questions him if he has clothes and furniture. The debtor says yes, and the schedules must be amended. It usually does not make any difference in the case, but for accuracy purposes the personal property must be listed.

Practice Pointer:

List the debtor having personal property and bank accounts as well on Schedule “B”.

3. Listing personal property that is not the debtors.

Some attorneys use the same petition template and forget delete the personal property of one debtor and it shows up in the next debtors petition.

Practice Pointer:

Review the petition with the client to avoid personal property being listed in the wrong petition.

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