What do trustees look for in Tax Returns, and Bank Statements?

[mikem456]

I just spoke with my attorney for the first time over the phone, and I don't feel to confident now in the bankruptcy.
First problem was he said I may have an issue with my income/expenses because I will be getting a raise in my job of $5,000 if I pass my probation. (State Job)
Second, I don't have any proof of my expenses, I live with my parents, and pay cash, they do not claim that cash as income, and I do not claim it as an expense on my tax return.
Also he asked if I have gambled as of lately, and I lied and said no because he said if I did he wouldn't take my case.
I called the company, and asked for a different lawyer if possible, but now am I having doubts about the whole bankruptcy. I only want to continue if all my debts will be discharged in a chapter 7.

[justbroke]

Did you already retain this law firm? We typically recommend that a person "interview" at least 3-5 attorneys so that they can find one that is a.) willing to take their case, b.) seems personable, and c.) you are comfortable with that attorney.

First, the prospect of "getting a raise" in the future, shouldn't affect a Chapter 7. Who knows for sure unless the money is in your pocket already? Second, you should always always be honest with your attorney! Perhaps if you told him/her "yes" to that question, they would have released you and returned the majority of your money (if you paid a retainer).

Third, I don't know what your attorney wants you to do for "proof of expense". The only time you need proof is when they are beyond the normal allowances (IRS financial standards which the United States Trustee calls the allowances). Or you are claiming some sort of "special" circumstances.

Just reads as though the attorney doesn't a.) like you, or b.) doesn't like to do Chapter 7s. I shouldn't read much into the latter because you already lied to the attorney (and maybe he/she realizes that).

I can't fix this for you. You need to have an honest conversation with the attorney.

[mikem456]

Thanks for your reply, you put me at ease a bit. So the tax return is only for income verification? I have not signed the retainer yet, they sent it to me electronically, they did however take 150$ from me so far, and are planning on taking the rest ($1500) out of my account tomorrow

[justbroke]

You have some soul searching to do.

Income tax returns are used by the Trustee to establish a.) income, b.) deductions, and c.) dependents. People don't deduct normal living expenses on their IRS tax returns. By normal I mean to include things such as rent, food, clothing, car payments, car repairs, etc. There are very few "life" necessities that can be put on a tax return. This is why the IRS came up with their Collection Standards as a baseline of what a typical family of one, two, three, four, et cetera, would spend in those areas albeit they aren't reflected in a typical tax return. The United States Trustee Program (USTP) takes those IRS standards and uses them as the UST's allowances for use in Means Testing. See https://www.justice.gov/ust/means-testing

As to whether your District would allow you to claim the entire allowance on Schedule J, when you're living with parents, is something I can't tell you because it's so specific to your District/Appeals Circuit. They expect you to have living expenses. They expect you to have food, clothing, rent, utilities, and other things. You may in fact be living at home with parents, because you have so much debt that you can't afford to be on your own. If you're paying your parents rent, then you can claim the rent. Again, you may even be able to claim the allowance under the USTP's allowances for a single person.

I wish you the best of luck.

[mikem456]

"you have some sould searching to do"
What do you mean by that?
What am i looking for?

[mikem456]

I just dont think there gonna discharge me. Another problem, is for work I travel sometimes, and they deposit the reimburesemt funds for travel expenses right into my account, this is untaxed money from the State. So is that gonna count as income against my expenses

[justbroke]

"you have some [soul] (sic) searching to do"
What do you mean by that?

It seems as though you have second thoughts about this particular firm and/or attorney and you may want to hire a new attorney. I can't help you with that portion of your "soul" searching.

You can always receive a discharge in Bankruptcy. The question is whether it's under Chapter 7, 11, 12, or 13. I suppose that you mean that you're not going to receive a Chapter 7 discharge. I would not give up at this point. As I wrote, you should consult additional attorneys and/or speak to another in that firm. It appears that this particular attorney isn't the type that "fights" for Chapter 7 debts. Again, I could be wrong because there is already an apparent distrust between the two of you.