Bankruptcy Wizard
The question is whether or not the stock options can be exempted since they are likely contingent on future employment. Whenever an employer treats something as income and it appears on the IRS Form W-2, it becomes difficult for someone to not see it as income. Since the value appears on an income statement (payroll stub), that bring it into question. I don't know if explaining it at the 341 Meeting would have done anything, really. The question would still be whether it's treated as "regular" income from the employer. There was also a question as to your claim of exemption, which would never be solved at a 341 Meeting.
My thinking is that the (Chapter 13) Trustee is thinking that... if the RSUs are vesting annually and are being treated as income on a paycheck stub, then it is income for all purposes. That's because the definition of "current monthly income" (CMI) in the bankruptcy code includes all income regardless of source or taxability.
Also, thinking like the (Chapter 13) Trustee, I would likely believe, since the income is on the paystub, that it is not something you can exempt using an exemption. It would be like trying to exempt future income, and there's no exemption for most income. Even with an otherwise protected income source, like social security or VA income, all income counts in a Chapter 13. (Protected income -- SSA/VA -- is only excluded in the Means Test.)
Please remember that the 341 Meeting is not the time where every detail of the petition, income, taxes, exemptions, or questions are drawn out. It is really just a short meeting, lasting 5 minutes on average, to get the debtor to testify, under oath, that everything they submitted is the truth. Trustees also get to probe a little if they have a specific question or their questioning causes them to drill down on an answer. When it's time to object, it's usually done in a writing such as an Objection to Claim of Exemption or other writing to the attorney.
As flashoflight has mentioned, this is likely a best interest of creditor's test (or Chapter 7 liquidation test) issue. The difference between Chapter 7 and Chapter 13 is that in the Chapter 7, the Trustee would have gone after the RSUs and waited for them to vest. In a Chapter 13, you get to keep all your assets, unless you surrender them, but you must pay the same value of the RSUs "value" over the life of the Chapter 13.
It will be interesting what your attorney does for this. There has been only one other case on BKForum related to RSUs. (And you responded to it which you should not. That thread is over 10 years old and the forum rules make notes about why you should not revive an old thread.)
My thinking is that the (Chapter 13) Trustee is thinking that... if the RSUs are vesting annually and are being treated as income on a paycheck stub, then it is income for all purposes. That's because the definition of "current monthly income" (CMI) in the bankruptcy code includes all income regardless of source or taxability.
Also, thinking like the (Chapter 13) Trustee, I would likely believe, since the income is on the paystub, that it is not something you can exempt using an exemption. It would be like trying to exempt future income, and there's no exemption for most income. Even with an otherwise protected income source, like social security or VA income, all income counts in a Chapter 13. (Protected income -- SSA/VA -- is only excluded in the Means Test.)
Please remember that the 341 Meeting is not the time where every detail of the petition, income, taxes, exemptions, or questions are drawn out. It is really just a short meeting, lasting 5 minutes on average, to get the debtor to testify, under oath, that everything they submitted is the truth. Trustees also get to probe a little if they have a specific question or their questioning causes them to drill down on an answer. When it's time to object, it's usually done in a writing such as an Objection to Claim of Exemption or other writing to the attorney.
As flashoflight has mentioned, this is likely a best interest of creditor's test (or Chapter 7 liquidation test) issue. The difference between Chapter 7 and Chapter 13 is that in the Chapter 7, the Trustee would have gone after the RSUs and waited for them to vest. In a Chapter 13, you get to keep all your assets, unless you surrender them, but you must pay the same value of the RSUs "value" over the life of the Chapter 13.
It will be interesting what your attorney does for this. There has been only one other case on BKForum related to RSUs. (And you responded to it which you should not. That thread is over 10 years old and the forum rules make notes about why you should not revive an old thread.)
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