I tell my clients to keep all of their financial records for at least seven years after their bankruptcy case is filed.
If you fail to keep your financial records for a reasonable time after the bankruptcy case is filed, it is conceivable that a creditor could request documents that you should be able to provide. If you fail to produce the records, your entire discharge could be denied. In 99 percent of all bankruptcy cases, I can’t imagine this ever happening.
However, I recently attended the Southeastern Bankruptcy Law Institute in Atlanta, Georgia. At this bankruptcy seminar, a bankruptcy judge from Missouri described a case where the debtor was the brother of a famous tennis player. This debtor had earned huge sums of money managing his brother’s tennis career. Unfortunately, he had also made some bad real estate investments.
In this case, the mortgage company evicted the debtor from his house. The debtor faced the challenge of moving lots of stuff from a big house to a much smaller one. His friends came out of the woodwork to help him get his stuff out. Unfortunately, in the confusion of rushing the move, his financial records were lost.
When a creditor demanded to review his financial records, this debtor was not able to comply with the demand. As a result, his entire Chapter 7 was dismissed. “I lost my stuff in the move” did not work back then and I don’t think it would work today either.
In this day and age, we have the benefit of modern scanners. Scan everything you can and don’t lose the disc! Have a back-up to your back-up.
Having quick reliable access to supporting documentation for your bankruptcy not only protects you from creditor attacks, it also makes life much easier if your case is selected by the United States Bankruptcy Trustee for an audit.