Of all the players in a New York bankruptcy, debtors are probably least familiar with the trustee. The trustee is tasked by the bankruptcy court to administer the bankruptcy estate for the benefit of the creditors. This means that generally the trustee’s responsibilities are at odds with a debtor’s interest in exempting as much property as possible from bankruptcy. The question that occasionally arises, then, is if the trustee will ever inspect a debtor’s home. In other words, does the trustee make house calls?
The answer is almost never. The trustee is responsible for investigating the financial affairs of the debtor, but in practice that means looking over the debtor’s financial reports, not acting like a private eye or an inquisitor into the debtor’s private life.
That does not, however, mean that trustee visits never happen. In fact, the trustee, or an agent of the trustee, can physically inspect a debtor’s assets when the situation calls for it. For most debtors, especially Brooklyn bankruptcy debtors, their assets aren’t of the kind a trustee would care to look into, but there are reports of it happening nationally. For example, if a debtor happens to live in an expensive neighborhood, then the trustee might do a drive-by visit to see what kind of accommodations he or she has. The same applies to a debtor’s vehicle.
Alternatively, the trustee might stop by if the debtor owns an unusual piece of property, like antiques, artworks, or pieces of jewelry. In fact, two of my clients were visited by a trustee because the trustee was tipped that they owned antiques (right in both cases). In most cases, though, the trustee will just send an assessor. Trustees are lawyers who rarely know much about unique or exotic items. They’re also busy and don’t want to be bothered.
Trustees are also more likely to visit if they suspect debtors are concealing valuable property. If they can prove sufficient cause, they might convince bankruptcy judges to issue search warrants to obtain any valuables. The bright side for such unscrupulous debtors is the rare opportunity to see a U.S. marshal in action. I should note that there is some controversy as to whether bankruptcy courts are authorized to issue search warrants.
Ultimately, trustees aren’t going to arbitrarily search through debtors’ belongings or visit their property. The odds that one would do so are extremely low, and either they’re benign, predictable circumstances, or they’re the result of debtor dishonesty. Honest debtors have nothing to fear.
If you are facing serious financial difficulties, then talking to an experienced New York bankruptcy lawyer can help you strategize your options, whether or not you own exotic furniture.
For answers to more questions about bankruptcy, the automatic stay, effective strategies for dealing with foreclosure, and protecting your assets in bankruptcy please feel free to contact experienced Brooklyn bankruptcy lawyer Bruce Weiner for a free initial consultation.