Does a BK trustee have the authority to monitor purchases you make through your bank account?

Question

I read somewhere that you must submit a document once a month prooving what the balence is in your bank account (which is understandable), but are they allowed to see if you made a few trips the the grocery store, or to Walmart, or if you you stopped to McDonalds a few times, or rented a few movies from Blockbuster, or if you paid anything on the rent or utilities and if you did... how much? To me, if it is true, it sounds a little sneaky, deceiving, and a violation of privacy. I know that when you file for bankruptcy, you sacrifice some of your privacy, but I don't know, this sounds like it's a little too far. But above all, I feel that I have a right to know, as the trustee should be charged with the responsibility to tell me. My attorney can't clairify on this.

Answer 1

I take it from your question that you are in a Chapter 13. I'll give you the bad news first, then the good news.

Yes, the Trustee does have the right to monitor your bank accounts because they want to ensure there is no bankruptcy fraud. The Chapter 13 plan is supposed to represent your best effort to repay your creditors. If you are spending money normally (Blockbuster, Wal-Mart, etc.) then there is no problem. The problem is if you are spending money at strip clubs and car dealerships.

Now the good news...Trustee monitoring of bank accounts almost never happens. Out of the 6000 cases I have been involved with, I have never seen it happen and I have never heard of it happening. Trustees are just too overloaded.

Once your Chapter 13 plan is confirmed, you should have no future problems as long as you comply with whatever guidelines you should already know about.

If you are in a Chapter 7, the Trustee still has the same rights. Unless there is some sort of problem or red flag at the Meeting of Creditors, you should have no problem.