Watch What You Say When You Meet The Bankruptcy Trustee

I tell my bankruptcy clients that when they meet the Chapter 7 Trustee they should answer his questions truthfully and simply, but that they should not volunteer information which is not responsive to questions. Last week, one of my clients was progressing through an uneventful meeting with her Chapter 7 Trustee. The Trustee asked whether the client expected an income tax refund for 2008, and the client said she did not. The Trustee was then about to close the meeting when the client blurted out a question, "What do you want me to do with my IRS stimulus check?" The Trustee then explained that the client would have to turnover the $1,600 check to the bankruptcy estate.

After the meeting concluded and the client walked out the Chapter 7 Trustee explained to me that although stimulus checks issued pursuant to the governments economic stimulus program passed and implemented earlier this year are non-exempt assets and part of the estate, most bankruptcy Trustees in our area do not pursue this money as an unofficial concession to bankruptcy debtors in the midst of terrible economic times. However, if a debtor or his attorney raises the issue during a meeting being recorded the Trustee is obligated to demand the money.

This innocent and well-intentioned question by this client cost the client $1,600. The lesson for bankruptcy debtors is that they should always provide complete and honest answers to questions either on the bankruptcy petition or to a bankruptcy trustee; otherwise, do not speak unless spoken to. You do not have to assist the bankruptcy trustee who, if he wants information, he will ask for it.

posted by Jonathan Alper, bankruptcy and asset protection attorney, Orlando, Florida