Here's the least you need to know: after 2005, and the BARF ACT, which changed the Bankruptcy Code that I knew and loved from a warm, fuzzy, debtor-friendly environment to a debtor-hostile environment, yet another hurdle was placed in the road of honest debtors.
You know about some of those hurdles if you are reading this: most debtors only file a Chapter 13 if they flunk the dreaded Means Test, and if there's no way to help them pass the dreaded means test.
And there are some folks that we can't help pass the Means Test, although few.
But today's solution in search of a problem is the ultra-dreaded RANDOM AUDIT, which can occur in a Chapter 7, or a Chapter 13!
And the random audit is exactly that; I've written about it another blog, so I won't beat it to death today.
And the worst manifestations in the caselaw of the random audit are Chapter 7 Cases where the debtor got a discharge order from the Bankruptcy Court, and said, "Oh, Goodie! My case is closed!"
But, as we all know, the case was not closed; it it typically open for administrative purposes for as long as a year or more in a "no-asset" Chapter 7. And four to five years in a case with substantial assets to be distributed to creditors.
And the last paragraph is not a misprint; in a Chapter 7, while a debtor may receive a Discharge Order fairly early in the case, the case is not over.
Now, a random audit is less troublesome in a Chapter 13 Case for one simple reason; few debtors attempt to file their own Chapter 13 Cases because they're smarter than that.
Getting a good result in a Chapter 13 is increasingly difficult, and I'm not absolutely sure that filing a Chapter 13 for a debtor who would have passed the means test if he'd waited another month (and would have qualified for a Chapter 7) is a polite thing to do.
But in any case, most Chapter 13 Debtors have lawyers, and presumably, will respond promptly to a random audit.
And, therefore, they won't get their cases dismissed because they ignored an audit, as Rafael Ventura did!
