Uh-Oh UST has questions

[destitute]

Hi All,

I filed chapter 7 on July 24th and received notice from my Attorney today that the UST has questions. I'm self employed and I'm over the median by about $18,000 but I qualified by a fairly safe margin on the means test. My 341 isn't until September 1st.

The UST has asked for profit and loss statements for the past six months which my attorney has already sent to his office. I'm hoping this is just a quick look and won't lead anywhere. My numbers are all legit and I have plenty of paperwork to back stuff up so I think I'll be fine.

The question is... how worried should I be at this point?

[StartingOver08]

This seems to be a normal procedure when you have self employment income.

Since you have all of your documentation lined up, you are mostly likely in good shape. Its not really possible to know without knowing more specifics. But what the UST has requested is certainly normal when you are self employeed and over median income.

[justbroke]

Measure how worried you should be by what your attorney tells you. If you have all the paperwork, no problems. The UST likes to see P&L statements for the self-employed... and to make sure they look sufficient to document your actual liabilities and income.

Nothing to worry about until they asking for a lot of paper. Sounds minimal to me.

[destitute]

That's what I thought but Big Brother wanting info just makes me nervous. I prefer to stay under the radar. My Attorney's office says there's nothing to worry about until there's something to worry about. Hopefully they will be satisfied and that will be the end of it.

[aces67]

As long as you filled out everything honestly and have documents to back up your numbers you should be fine.

[miozelous]

UST asked for us to provide more paper work 2 weeks before 341 to support expenses. They called my lawyer and never showed up at my 341. They must have been happy with what we gave them. I was glad they did it before 341. That meeting was not as nerve racking knowing they would not be there.

[Ann]

I'm self employed (I run a small in home day care) but last year I actually "lost" money based on my start up expenses. This year I have yet to pay any taxes on my income and I really do not "document" anything until the end of the year when I need to figure all that stuff out. How is this going to affect me filing for chapter 7????

[Pizza]

Self-employed is often scrutinized because many people hide a little extra business under the table. Proper documentation should clear this up.

[StartingOver08]

I'm self employed (I run a small in home day care) but last year I actually "lost" money based on my start up expenses. This year I have yet to pay any taxes on my income and I really do not "document" anything until the end of the year when I need to figure all that stuff out. How is this going to affect me filing for chapter 7????

Your best bet is to document everything before you file. A BK filing is very detailed oriented. The trustee is not going to buy: Oh - I only document at the end of the year. The safest thing to do is get your financials in order NOW so you can file with accurate information. That way if the panel trustee (or even the UST) requires additional info, it is all ready to go and matches your petition.

Remember the trustee is there to find assets to liquidate to pay creditors. Those filers that had the most difficulty were those that did not have the documentation. The larger your debt, the more documentation you need to provide; however, that does not mean that a small amount of debt requires no supporting docs!

[destitute]

Well I just heard from the Attorney's office this morning. The UST is "examining" my profit/loss statements and a representative from their office will be attending my 341 next week.

I wasn't nervous about the 341 until now. I have all of my documentation and can back up every single number but knowing the UST's office will be there is really stressing me out. I was told they may just watch or they may ask questions about my business. I just wish I knew what concerns they have so I can better prepare but I guess that will just be a "surprize".

Has anyone else run into this at their 341? How did it go? Is this still routine or an indication of a bigger storm brewing?

[goingcrzy]

What type of business is it? Is it cash heavy? If so, the UST may want to know or see receipts for cash transactions.

I think they just want to make sure you are not lowering your personal income by purchasing personal items under your corp structure.

[destitute]

The business is computer programming and associated services. No cash at all. 99% of income is through credit cards and the remaining 1% of my customers pay by check.

I have a complete detailed P&L statement for the previous 6 months. No personal items claimed as business. Basically, I haven't bought any personal stuff since I'm broke LOL

[goingcrzy]

you shoud be ok. The ust may just ask about any larger purchase. Like if you bought a new computer - why and is it just for business.

I am assuming there is no value in the company? The the trustee couldn't sell the assets and pay back creditors?

[destitute]

I think I'm fine on purchases. There really isn't any value for the company. The basic office equipment and computers I have are all at least 3 years old and covered by my exemptions.