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  1. #1
    Join Date
    Jun 2017

    Default Is it Fraud to Fail to Report an Income Increase to the Bankruptcy Trustee

    My question involves bankruptcy in the state of: TX.
    3 days after 341 meeting, US Trustee sent my lawyer a letter requesting additional documents. (2 yrs tax returns; pay stubs and bank statements since Oct 1, 2016; employment ageeement/contract from current employer as well as recent pay stubs; documentation of a $67K debt I claimed). The petition was filed April 20, 2017. I started a new full time job April 1 and will make almost double what I made before. I did not include this in petition because I prepared and submitted paperwork to my lawyer prior to actually starting full time work. I did not know I needed to include it. I did mention to my lawyer that I was quitting former employer but did not get any response. I did disclose this info in 341 meeting. It now appears as if I was trying to hide this increase in income which is why I suspect I'm flagged for an audit. Will this be considered fraud? Will my Ch 7 case be dismissed? Can I convert to Ch 13? Will I get a chance to explain? I'm absolutely panicked!!! I hope someone can advise or share wisdom re: this.

  2. #2
    Join Date
    Sep 2010

    Default Re: Us Trustee Audit for Suspicion of Fraud

    The problem you face is two fold.

    1. You signed your schedules under penalty of perjury and you lied. This could lead to a referral by the UST to the FBI for further investigation.

    2. Since you failed to disclose on Schedule I your current employer and current income, you failed to disclose whether or not you had the ability to pay your creditors. The UST is looking to see if there is an "abuse" of the system. If the UST determines there is such an abuse it will result in a Motion to Dismiss the Case or, worse, a Complaint to Deny Discharge.

    This is a big problem and I highly recommend that you meet with your attorney and discuss your options.


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