NACBA Testimony Prompts U.S. Trustees to Change Audit Procedure
The documentation required for a consumer bankruptcy petitioner during an audit has created problems for clients and consumer bankruptcy attorneys since the process was instituted. The standard document request letter required detailed records dating back six months--records that few debtors who have been in a state of financial distress and often operating on a cash basis are able to produce.
Following NACBA President Henry Sommer's testimony before Congress on May 1, the U.S. Trustee Program determined that the standard documention previously required was not necessary in every audit, and revised the standard document request letter to exclude the requirement that debtors explain deposits and withdrawals of less than $500. Such information may still be requested from an individual debtor if it is relevant in that particular bankruptcy case.
Many thanks to NACBA for fighting the battle on behalf of consumer bankruptcy attorneys and bankruptcy petitioners, and to the Trustees for responding. After the past year and a half, it's a relief to see reason and common sense prevailing in the bankruptcy process, even in a small way. Here's hoping that some of Sommer's other excellent points during that testimony are heard as well, and that we see consideration for similar adjustments to the required pre-filing documentation for low-income debtors and other daunting hurdles that discourage the very debtors most in need of bankruptcy.
