6 more payments and final audit

[moses911]

Hello,

6 more payments to go and I received a letter from the trustee that they will do a final audit before discharge.

here is my situation:

1) for the last three years I’ve been doing lot of overtime which increasing my income by 100% every year.
2) yes I’m providing my yearly tax return to trustee and my lawyer said that is sufficient and it is up to trustee if they want to increase the payment.

3) I do send refund check for trustee and in fact my last refund check was 20k and I sent it to trustee

4) my fear is when I do this year taxes I will send in April which will show another increase will the trustee audit me at the final audit and accuse me of not telling him? Or is it too late for trustee since I’ve been providing yearly tax returns?

thanks much

[justbroke]

As your attorney said, you disclosed your tax returns as required. The Trustee didn't ask for any additional money or file a Motion to Modify Confirmed Plan to increases your payments. The Chapter 13 Trustee can't then, in April, say that you owe money in arrears when they had opportunity to modify your plan.

So, listen to your attorney and just continue to follow the plan and your attorney's guidance.

As an anecdote, there are many Chapter 13 Trustees that don't care what happens between confirmation and the end of the plan so long as the debtor made "all payments" under the plan. On the other hand, there are some Chapter 13 Trustees that go crazy if you make a single dollar more than the prior year. You seem to have one of the Chapter 13 Trustees that just likes the status quo.

At least that is my view.

[moses911]

Ya my whole journey was very odd at all levels. So in the final audit they can’t use my last tax return that I will file in April to say I owe money especially that I will have 1 payment left after I send my 2021 tax return to trustee

thanks for your quick response

[flashoflight]

MOMODs cost money, time, and they're almost always contested by debtor's counsel. My BK lawyer has practiced for 30 years and never received a trustee-initiated MOMOD based off of a tax return. The trustee does chase tax refunds, which to me is preferred vs chasing wage increases. I've gotten pretty good at making sure I don't get a tax refund. In fact, I prefer to owe a little.

[crazytimes]

I have six payment left and haven’t received anything from the trustee about an audit. Like justbroke mentioned you have some trustees that go crazy but mine has been hands off and I have never heard from him. All I do is send my annual tax documents and I keep all refunds. I am assuming the audit is about them and how their process went collecting and not re-looking at me again. Nothing to hide but hoping I am not asked for all kinds of documents again. I showed annual pay increases which is around $20K more than when I started in 2017 but my attorney said don’t worry about it and then trustee never asked for more money.

congrats on only six more months. You are almost there.

[Barbisi]

@flashoflight, in our case, a required tax refund disclosure to the trustee is what triggered our MOMOD battle.
My husband was laid off in early Jan.2019, but got a job offer in late Jan. 2019 and started working again in mid-Feb.2019 but the trustee didn't attempt to raise the payment by 100% ($600 + increase) until July-August 2020, when he requested our tax refund and discovered my husband was making almost 20k more at his new company. Of course, a lot of this raise was eaten up by taxes and increased medical insurance costs and ongoing treatments, so he had to "settle" for only $300+more when our attorney contested it.
The funny is, our lawyer was truly shocked that the trustee went ahead and without warning just raised the payment to over a 1K per month before we were able to object- he said this trustee had never, ever raised any of his client's CMP before in all the years he had dealt with this particular trustee!!!
moses911, I hope you get your discharge without any additional drama. Good luck!
crazytimes, you are so fortunate that your trustee actually was hands off and didn't ask for any more money. Best of luck getting an easy discharge.

[Barbisi]

Actually, a typo- not tax refund but tax return -we never had to turn over any refunds.

[Zombie13]

Yes so in August 2020, we sent the tax return, then got a letter from the court, about the trustee's MOMOD, with intent to raise the payment to something like $1300 monthly. Our attorney mentioned he was surprised the trustee did not contact him first. We filled out the I&J forms again, with updated income and expenses. At that time, our "increase" in disposable income came to about $30 per month. Expenses included increased mortgage and medical expenses. So, the attorney said, we should be ok, and should not have to pay an increased payment. Unfortunately, in a way, 3 days later I was notified of an out-of-cycle pay increase. to the tune of about $300 per month. Argh! Due to the timing - the trustee's recent MOMOD, and we had 18 more payments remaining, we reasoned we had to disclose the information. It was not worth taking the risk of 'keeping it quiet'. Now, if this raise had occurred at some other time, when a MOMOD was not under way, we would still notify the attorney just to keep everything above board, but I think the attorney would say, just keep doing what you're doing - make the payments on time, and submit the tax returns when requested. And in that case, we might have avoided a higher payment.

In the words of our attorney:: "Nice raise, but bad timing". Yeah.

In any case, we are done Permanently with making BK payments.

[Zombie13]

moses911 - dang you've been workin hard the last 3 years! So I tip my hat to you... I know what it's like. So, if you have doubled your income, are you working 2X the hours? Our attorney told us, there is no motivation to increase income in a Ch13. Also though... there is more to life than money and work, usually. So live a little, if you can! Especially if the trustee is just gonna suck it all from you like a cash vampire.

With 3 months or so after April, I doubt the trustee is going to try to raise the payment. If your overtime decreases, you could use that as an argument I suppose. But again, 3 payments? It will probably take 2-3 months for you, your attorney, and the trustee to negotiate, get on the docket, etc. So, it appears unrealistic to me.

nanoscopic rant below, replying to my wife @barbisi.

Ah also forgot to mention... as Barbisi mentioned, I was laid off early January 2019... first day back at ye olde jobeth, in fact... As I pulled into the parking lot I got a text from my manager stating *we* had a meeting in HR at 11 AM. I knew what that meant, and I truly, did not give half a single sh*t about it. I had 14 weeks (3.5 months) severance coming to me and I was thinking during the meeting, yeah yeah yeah bla Blah BLAH stop droning and cut my <insert your favorite grawlix here> check cause I got yoga at noon... yknow, My Priority mmkay? So... let's roll huh? I accepted a job with a new company in February, was getting salary, and the severance from ye olde jobeth at the same time so, it worked out pretty well. And for several weeks (before I started the new job; So much better btw), I got to stay up late, sleep late, and take a yoga class twice each day, and take naps too. So it worked out fine.