DISORGANIZED FINANCIAL RECORDS MAY RESULT IN DENIAL OF BK DISCHARGE

Section 727 of the Bankruptcy Code states that “(a) the court shall grant the debtor a discharge, unless-… (3) the debtor has concealed, destroyed, mutilated, falsified, or failed to keep or preserve any recorded information, including books, documents, records, and papers, from which the debtor’s financial condition or business transactions might be ascertained, unless such act or failure to act was justified under all of the circumstances of the case.” To illustrate, if you are operating a business which has caused you to borrow a lot of money to finance losses to allow the business to continue operating, you must keep accurate records of gross receipts, expense payments and all financial transactions related to the business. You must keep accurate business records that will allow you or the bankruptcy trustee to reconstruct all financial transactions to determine what happened to the business and why it lost money. It is preferable to have a CPA prepare your financial records so he can attest to their accuracy. Not only must debtor keep financial records, these financial records must be organized and be easily reconciled. If the records are disorganized and lead nowhere, the court may deny debtor a discharge. If you have obtained large cash out from refinancing your house, you should keep accurate records of how the money was used. If the money was used for home improvement, keep records of receipts and contracts involved in the improvement. If the money was used to pay for a medical emergency of a relative abroad, keep records of the medical expenses spent abroad, i.e. hospital and doctor bills, as well as proof of money wired to beneficiary.

《楊清泉律師專欄》DISORGANIZED FINANCIAL RECORDS MAY RESULT IN DENIAL OF BK DISCHARGE(二)