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Audits Refute Claim of Widespread Debtor Fraud

by Cathy Moran, California Bankruptcy Lawyer on April 24, 2007 · 0 comments · Posted in General Bankruptcy Information

Audits of randomly selected bankruptcy cases conducted over the past six months by the United States Trustee show little or no fraud on the part of debtors.  A representative of the Executive Office of the US Trustee spoke at NACBA’s convention last week and reported that the audit results so far support what debtors’ attorneys have said all along:  debtors are overwhelmingly honest on their schedules.

The harsh and ill written Bankruptcy Act of 2005 was sold to Congress on the premise that a substantial fraction of debtors concealed assets or income.  The audits disprove that.  The audits are finding errors, most of them innocent and trivial.

I look forward to seeing what the current Congress does with this information.

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