If you are filing Chapter 7 bankruptcy, you may be surprised when your bankruptcy attorney tells you that you need to provide the Chapter 7 trustee with 90 days of bank statements for every bank account you have, including the statement that covers the date you filed bankruptcy.

Some clients ask, “Why does the trustee need all of this? I already listed my bank accounts and balances on my bankruptcy petition.”

The answer is simple: the trustee is not just looking at how much money you had on the day you filed bankruptcy. The trustee is also looking at what happened in your accounts before you filed.

Your bank statements can provide the trustee with a great deal of information about your financial affairs.

You Need to Provide the Statements Before Your 341 Meeting

At a minimum, a Chapter 7 debtor should expect to provide the trustee with bank statements covering the 90 days immediately preceding the bankruptcy filing, including the statement covering the bankruptcy filing date.

The statements generally need to be provided to the trustee at least seven days before the §341 meeting of creditors. This gives the trustee time to review the statements before questioning you at the meeting.

This is important because the trustee may have already identified questions about your bank accounts before you ever appear on Zoom for your §341 meeting.

In my practice, I tell clients that they should not look at the request for bank statements as simply another piece of paperwork that needs to be uploaded to the bankruptcy portal. The trustee is actually reviewing these statements.

First, the Trustee Is Checking Your Bankruptcy Petition

One of the trustee’s most basic jobs is to determine whether the information contained in your bankruptcy petition is accurate.

For example, suppose your petition says that you had:

• $2,500 in your checking account;
• $500 in your savings account; and
• no other bank accounts.

The trustee can compare those figures with your actual bank statements.

If your bankruptcy petition says you had $3,000 in your checking account on the date of filing, but the bank statement shows $7,500, the trustee is going to have questions.

Likewise, if your petition lists a particular bank account but the statement shows that the account was closed shortly before bankruptcy, the trustee may want to know where the money went.

The bank statements therefore give the trustee a way to verify the information contained in the bankruptcy petition.

The Trustee Is Also Looking at Money Coming Into Your Accounts

The trustee is not simply looking at the ending balance.

The trustee may examine deposits and other transfers into your accounts.

For example, suppose you received several large deposits shortly before filing bankruptcy. The trustee may want to know:

Where did that money come from?

Was it:

• Wages?
• A tax refund?
• A bonus?
• A gift?
• Money from another bank account?
• Proceeds from the sale of property?
• Money from a business?
• A loan?
• An inheritance?
• Money belonging to someone else?

Most ordinary deposits will have a perfectly reasonable explanation. But the trustee has a responsibility to investigate transactions that could indicate an undisclosed asset or source of income.

A large deposit from another bank account, for example, may lead the trustee to ask for the statements from that other account.

The Trustee Is Looking for Money Going Out of Your Accounts, Too

The trustee can also be interested in unusual payments or transfers out of your bank accounts.

This is particularly important when the debtor has transferred money or property to another person shortly before filing bankruptcy.

For example, suppose you transferred $10,000 to your brother three months before filing Chapter 7.

The trustee may ask:

Why did you give your brother $10,000?

If the money was a legitimate payment for a debt that you owed him, there may be an explanation. But if the payment was actually an attempt to move money out of your name before filing bankruptcy, the trustee may have a potential preferential transfer or fraudulent transfer issue.

Payments to family members can receive particular attention because transfers between relatives can raise questions about whether the debtor received reasonably equivalent value in return and whether the transaction was an effort to protect assets from creditors.

The important point is that the trustee is not necessarily accusing you of doing anything wrong simply because the trustee asks about a transaction.

The trustee’s job is to investigate.

Your Bank Statements Can Lead the Trustee to Other Accounts

One of the more important reasons trustees review bank statements is that the statements can provide clues about other financial accounts that were not disclosed in the bankruptcy petition.

For example, a bank statement might show transfers to or from:

• PayPal;
• Cash App;
• Venmo;
• Zelle;
• another bank;
• an investment account;
• a credit union account; or
• an account belonging to a business.

The trustee may then ask:

What is this account?

This is one reason it is extremely important to tell your bankruptcy attorney about all of your financial accounts and electronic payment accounts before filing bankruptcy.

A Cash App or PayPal account, for example, may not feel like a traditional “bank account” to you. But if there is money sitting in the account on the date you file bankruptcy, that money may constitute an asset of the bankruptcy estate and may need to be disclosed.

If an account containing more than a nominal amount was omitted from the bankruptcy petition, it may be necessary to amend the bankruptcy schedules to disclose it.

It is far better to discover and correct an omission voluntarily than to have the trustee discover it by examining your bank statements.

The Trustee Can Follow the Money

One of the things I tell bankruptcy clients is that you should assume that the trustee can follow the money.

For example:

You have $20,000 in your checking account.

You transfer $15,000 to another account.

The balance in your checking account is now only $5,000.

That does not necessarily mean that you have reduced your assets to $5,000.

The trustee may simply ask:

Where did the $15,000 go?

If you transferred it to another account that you own, the trustee may want the statements from that account.

If you used it to purchase a vehicle, the trustee may want to know about the vehicle.

If you gave it to a relative, the trustee may investigate the transfer.

If you spent it on ordinary living expenses, you may simply need to explain the expenditures.

The important thing is that moving money from one account to another does not make the money disappear for bankruptcy purposes.

The 90-Day Period Is a Minimum—Not a Maximum

Another common misconception is that the trustee is limited to looking at 90 days of bank statements.

That is not correct.

The 90-day bank statements are generally the starting point for the trustee’s review. But a trustee can request additional financial records when circumstances warrant it.

For example, if the trustee sees a substantial transfer shortly before bankruptcy, the trustee may want to know where the money came from and where it went.

The trustee may therefore request:

• six months of bank statements;
• one year of statements;
• two years of statements; or
• potentially even more.

This is particularly common when the debtor owns or operates a business.

Business bank accounts can involve numerous transactions, transfers between accounts, payments to family members, payments to insiders, deposits from customers, and transfers between personal and business accounts.

If a trustee believes that a potentially recoverable transfer occurred, the trustee may investigate the transaction much further than the initial 90-day period.

What Should You Do If the Trustee Requests More Statements?

Don’t panic.

A request for additional bank statements does not automatically mean that the trustee has determined that you did something wrong.

It may simply mean that the trustee saw something that requires an explanation.

The best thing you can do is provide your bankruptcy attorney with the requested information and an honest explanation of the transaction.

Do not attempt to move money, close accounts, transfer assets to relatives, or otherwise rearrange your finances simply because you believe the trustee might be interested in them.

Those actions can create substantially more serious problems.

Be Completely Honest With Your Bankruptcy Attorney

Bankruptcy is a process in which financial information is examined in considerable detail.

Before filing Chapter 7, tell your attorney about all of your bank accounts and financial accounts, including accounts that you may not consider traditional bank accounts.

Tell your attorney about:

• Cash App;
• PayPal;
• Venmo;
• investment accounts;
• cryptocurrency accounts;
• online financial accounts;
• accounts at other banks;
• accounts that were recently closed;
• transfers to family members;
• large deposits;
• large withdrawals; and
• money that was moved from one account to another.

Do not assume that something is too small or too insignificant to mention.

Your bankruptcy attorney can determine whether an account or transaction needs to be disclosed.

The Bank Statements Tell the Trustee a Story

Your bankruptcy petition tells the trustee what you say your financial situation is.

Your bank statements allow the trustee to compare that information with what actually happened in your accounts.

That is why trustees take the 90-day bank statement requirement seriously.

The trustee is looking for more than just the balance on the day you filed bankruptcy. The trustee is looking for assets, transfers, deposits, payments, other accounts, and anything else that may require further investigation.

In most Chapter 7 cases, the bank statements simply confirm what the debtor has already disclosed, and the trustee moves on.

But if the statements reveal something unexpected, they can lead to additional questions and requests for documentation.

The Bottom Line

If you are filing Chapter 7 bankruptcy, expect to provide at least 90 days of bank statements for every bank account, including the statement covering the date you file bankruptcy, and provide them to the trustee at least seven days before your §341 meeting.

And remember: 90 days is not necessarily the end of the trustee’s inquiry.

If the statements reveal unusual transfers, undisclosed accounts, payments to relatives, significant deposits, business transactions, or other potential issues, the trustee can request additional records and investigate transactions going back substantially further.

The safest approach is to be completely transparent with your bankruptcy attorney from the beginning. There is no advantage to hiding an account or transfer. In fact, an undisclosed account or transfer discovered by the trustee can turn an otherwise straightforward Chapter 7 bankruptcy into a much more complicated matter.

As a bankruptcy attorney who has practiced exclusively in consumer bankruptcy for more than 30 years, I have seen firsthand how much information a trustee can learn simply by reviewing a debtor’s bank statements. The best bankruptcy cases are the ones where we identify and address these issues before the trustee does.