Will they come search my house or apartment if I file for bankruptcy in New York?

A question that we get from time to time from clients and prospective clients in Manhattan, Bronx, Brooklyn and surrounding counties is whether if they file for bankruptcy some one will come search their house or apartment.

From an attorney perspective this question is always troubling because whether or not someone will actually come search your house or apartment if you file for bankruptcy, the schedules and statement of financial affairs need to be answered completely and truthfully. There are currently many individuals serving time in federal penitentiary who have been convicted of “bankruptcy crimes” — such as concealing assets in connection with a bankruptcy case.

The bankruptcy trustee has the ability to obtain an order authorizing him or her to search the debtor’s house or apartment with the assistance of the United States Marshall — and break doors, locks and safes to conduct an investigation. Usually this type of order will be obtained on an ex parte basis — meaning without prior notice to you to prevent you.

The other thing to bear in mind is that when you file for bankruptcy you are allowed to keep certain things. These are called exemptions. For most of our clients the exemptions (what they are allowed to keep) in property that they are allowed are greater than the value of all of the “property” they own. Put another way, most of our clients get to keep all or most of their property in bankruptcy. Of course, this is very fact specific and depends on the property in question and its value. Just because most of our clients get to keep all of their property doesn’t me that you will. However, the subject of prebankruptcy exemption planning is a way of seeking to maximize exemptions if you have property in excess of permissible exemptions. We have covered this in prior posts.

So in answer to the question of whether they will come search your home or apartment if you file for bankruptcy, the answer is that the schedules, statement of financial affairs and other documents in connection with your bankruptcy case should be prepared truthfully and completely on the understanding that the trustee in your bankruptcy case has the ability to get a court order on an ex parte basis (i.e., without any prior notice to you). If you are truthful and honest in connection with your bankruptcy case you have nothing to fear from this. None of our clients have ever gone to jail for bankruptcy crimes — and we intend to keep it that way. We work closely with all of our clients to make sure that they understand their obligations as a debtor in a bankruptcy case, but also to make sure they get to keep as much property as they are legally allowed.

Please feel free to contact us at 888-867-8165 or by e-mail at info@starrandstarr.com to schedule a free initial consultation.