I have over $250,000 that I can discharge in bk. Is this high and potential for audit by the trustee?
State/Country relating to question: California
The trustee is likely to look at the timing of the debt, i.e., if you have a lot of recent purchases, then that could show "bad faith" and an attempt to abuse the bankruptcy code -- which could lead to an action to dismiss your case as the product of fraud.
There is another risk that I can envision, but it's not from the trustee, so I'll leave that for another question.
Hope this helps.
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Attorney and Real Estate Broker -- Retired (mostly)
What is the other risk that you envision? Is discharging $250K a lot higher than the average people? What percentage of the people discharge $250K. Most of my debt are business debt that I guarantee for my private S-Corporation. I want to file BK but I heard that it can get really complicated.
If it's $250K in unsecured debt (credit card, personal loans, etc.), then that will get the trustee's attention to ask about the timing of when the debt was incurred. If it was incurred close to filing bankruptcy, that suggests bad faith.
The other risk is that if any individual unsecured creditor is being hit for more than $25,000, then that creditor may file an adversary proceeding and try to prove that your transactions were fraudulent. The result will be that you will have a full-blown lawsuit on your hands, and unless you're preared to pay your bankruptcy lawyer to defend, you may well lose and get stuck with a nondischarged portion of unsecured debt.
I can't evaluate this, because I don't know enough about the facts of the case. But, the fact that you are asking about the issue, causes me to raise my antenna and wonder if there isn't an issue here.
And, if my antenna are raised, then you can be assured that the trustee's antenna will also be up.
They're business credit cards and business line of credit. Most of the transaction were incured between 01/2006 to 12/2008. Lots of balance transfer between creditors because of the promotional rates. I lost my job in 03/2009. How far back will the trustee ask me to show all of the transactions?
If the debt was incurred over a year ago, I doubt that it will raise an eyebrow on the trustee. You could still be challenged by a creditor, though.
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