The United States Trustee (“UST”) is a division of the Department of Justice. The UST is charged with maintaining the integrity of the bankruptcy system. The UST audits the documents submitted by individuals filing bankruptcy. In 2013, the UST audited 1 out of every 2,050 chapter 7 and chapter 13 bankruptcy cases. Out of 390 audit reports, a material misstatement was reported in 17 percent of the random audits and in 32 percent of the exception audits (where there are one or more “red flags”). This resulted in an overall material misstatement rate of 25 percent. Once a misstatement is found, the UST has many options to ensure the integrity of the system is maintained. In the most serious cases, the UST can refer the matter for criminal prosecution but in most cases the bankruptcy documents can be revised to correct the error and the bankruptcy proceeds as originally planned.
The term material misstatement sounds intentional but in many cases the error is little more than a misunderstanding. Don’t let small mistakes become big headaches! The advice of an experienced attorney is the best way to understand your rights and ensure your papers are prepared correctly the first time.
At the Law Office of Michael Primus, we have helped hundreds of clients get out of debt, stop wage garnishments, and start fresh through bankruptcy. If you live in Contra Costa County and have debt problems, contact us for a free in office consultation. Offices in Walnut Creek, Antioch and Hercules.