Many clients feel nervous when asked for bank statements.
“Why do they need all my transactions?”
“Are they looking for something specific?”
Yes — trustees are looking for certain patterns. But it’s usually about verification, not suspicion.
Here’s what they review.
🔍 1️⃣ Undisclosed Income
Trustees compare deposits to:
- Pay stubs
- Tax returns
- Reported income
If regular deposits don’t match reported income, they will ask questions.
Examples:
- Side jobs
- Cash income
- Business income
- Rental income
💸 2️⃣ Large Transfers
They look for:
- Large withdrawals
- Transfers to family
- Payments to one creditor but not others
- Wire transfers
- Cryptocurrency purchases
These may trigger preference or fraudulent transfer review.
🎁 3️⃣ Gifts or Repayments to Family
If you paid back:
- Parents
- Siblings
- Close friends
Within certain timeframes, the trustee may examine whether it was a recoverable preference.
💳 4️⃣ Recent Large Credit Card Payments
If you paid off one card before filing, trustees may review whether it qualifies as preferential treatment.
🏦 5️⃣ Hidden or Undisclosed Accounts
Trustees check for:
- Transfers to accounts not listed in your petition
- Online banks
- Cash App / PayPal / Venmo balances
All financial accounts must be disclosed.
🚗 6️⃣ Purchase of Assets Before Filing
They may look for:
- Vehicle purchases
- Jewelry purchases
- Large cash withdrawals
Especially if done shortly before filing.
📅 7️⃣ Timing of Transactions
Trustees pay close attention to:
- The 90 days before filing
- The 1 year before filing (for insiders)
- The 2-year federal fraudulent transfer period
Timing can determine whether a transaction is recoverable.
🧠 What They’re NOT Doing
They are not:
- Judging your spending habits
- Critiquing your groceries
- Policing normal life expenses
They are verifying that:
- Assets are disclosed
- Transfers are explained
- Creditors are treated fairly
📌 The Bottom Line
Bank statements are one of the most important documents in bankruptcy.
Trustees review them to ensure:
✔ Full disclosure
✔ No hidden assets
✔ No improper transfers
✔ Accurate reporting
Honesty and preparation make this process much smoother.
If you’re concerned about specific transactions, discuss them with your attorney before filing. Planning prevents surprises.
