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Tell Your Attorney Everything: Including Your Income And Expenses.

By Douglas Jacobs, California Bankruptcy Attorney

Always tell you bankruptcy attorney everything.  There are a number of posts about disclosing all of your assets and all of your debts, but everything includes your income and expenses as well. And not just current income; please tell you attorney about bonuses you expect, receivables you are going to get, or anything else that might possibly be relevant.

This problem occurred to me recently, when a client had carefully itemized all of his expenses and they became the ones used on the bankruptcy petition.  We even went over it, line by line, before signing.

Then, to my complete surprise, sitting at the meeting of creditors, when the trustee asked if he had included everything, he remembered a small monthly stipend he receives from a trust each month.  It wasn?t much, but enough to question all of the income numbers on the petition and to raise the eyebrows of the trustee.

That led to ?the letter? from the Assistant US Trustee questioning whether my client should be in a Chapter 13 repayment plan rather than the Chapter 7 that we had filed.  So, I sat down with the client and we went over, again, all of his income and expenses.  And, lo and behold, he had some unclaimed expenses that would completely offset the ?found? income.  Terrific. Problem solved?  Not exactly.

The US Trustee?s office is taking the position that my client is locked into the expenses originally claimed, but that the additional income should be considered.  I think if it comes to that; we?ll ultimately win that argument in front of the judge.  The expenses were reasonable and there is a right to amend your schedules in bankruptcy.

But the process is going to cost my client a lot of peace of mind and whatever fees I will charge him to fix this.  Something that could and should have been avoided from day one if he had only heeded the warning to tell his bankruptcy attorney everything.

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Full post as published by Credit Law Network on February 11, 2011 (boomark / email).