Chapter 7 Bankruptcy Trustee in Riverside
Recently in a hearing before him, Chapter 7 Trustee in Riverside Charles Daff asked the attorney for a debtor if the attorney had reviewed the tax return that the attorney had sent to him the trustee. The attorney said that he had reviewed the tax return. Mr. Daff then asked the attorney if he had reviewed the “Schedule C” of the Tax return and why the gross income of the debtor was not listed? The attorney said he listed the net income of the business.
Mr. Daff then said that the proper amount to list on Statement of Financial Affairs #1 was the gross income of the debtor. Trustee Daff related that Judge Riddle used to tell debtors that statement of Financial Affairs #1 was there to put “any money that the Debtor touched.” In the case at hand, it appears that the debtor earned over $200,000 from a trucking company that he ran.
Mr. Daff asked if the trucking company was a corporation or a sloe proprietor . The debtor said sole proprietor. The Trustee asked if the debtor owned any trucks because none were listed in the petition. The debtor said he owned one truck and a few trailers.
It turns out that the truck was worth over $50,000 and did not have any liens.
Chapter 7 Riverside Bankruptcy Trustee Daff told the debtor to immediately stop driving the truck and the Trustee did not want a truck driving on the California roads in which the debtor was in bankruptcy. The reason being that since he was the trustee, any liability should something happen with that truck or should the truck be in accident, the Trustee would be liable. Several times during the hearing, the trustee told the debtor not to drive the truck and that the Trustee’s agent would be out to look at the truck in order to sell the vehicle for the benefit of the estate.
Review the tax return of every client before it is sent to the trustee and ask about all the numbers in the tax return. If you do not understand the tax return, ask the debtor or hire a CPA to explain it. Had the Attorney asked the debtor about the tax return, the Trustee would have not walked away with a $50,000 asset.