March 1, 2017
Each year, the U.S. Trustee conducts bankruptcy audits of consumer Chapter 7 and Chapter 13 bankruptcy cases to determine the accuracy of the filings, and to identify fraud, abuse, and error in the bankruptcy system.
One out of every 250 cases filed is subject to a random audit. The trustee also reviews cases if the claimed income or expenses are out of the norm for the area (called an "exception" audit). In 2016, an exception audit occurred in approximately one out of 925 consumer cases. (The U.S. Trustee stopped conducting exception audits on April 13, 2016, due to budget constraints.)
Out of the total completed audits, the trustee found material misstatements (significant inaccuracies) in 13% of random audits, and 26% of exception audits—an average of 20% total.
In two-thirds of the cases, the debtor (bankruptcy filer) significantly misstated income. The remaining misstatements pertained to property ownership and property transfers.
Here are the districts with the highest, and the lowest, misstatement rates:
You can review a copy of the U.S. Trustee's March 2017 Public Audit report here.
Effective date: March 1, 2017