skd283615sdc.jpgEvery person filing bankruptcy must provide the court a list of all their property, including bank accounts and the balance in each account on the day the bankruptcy is filed.  Since bank account balances change daily or even hourly, it is often very difficult to precisely state the exact account balance, especially if there is a delay between the time a case is signed and the time it is actually filed with the bankruptcy court.

Outstanding checks present a difficult problem.  If you have $1,000 in the bank but you just wrote a $700 rent check the day before signing the bankruptcy paperwork that still has not cleared the bank, do you list $1,000 in the account or $300?

According to a bankruptcy court in Florida, a debtor should list the amount in the account without regard to outstanding checks.  (See In Re Brubaker, 426 B.R. 902 (2010)).  As a result, the debtors were forced to pay over $513 to the Chapter 7 Trustee.

How can this problem be avoided?

  • Call the bank before signing the bankruptcy petition or print out the online account ledger and give this information to the bankruptcy attorney.
  • Tell your attorney the next date funds will be deposited into the account. If your employer will deposit the next paycheck into your account the day after the bankruptcy petition is signed, tell that to your attorney.
  • Wait until the checks clear before filing the case.

Most bankruptcy trustees require that you bring a bank statement to court to verify how much was on deposit on the day the case was filed.