My recent Chapter 13-Trustee recommends dismissal

[chargers777]

Hello all,

So, I ended up filing a chapter 13 very recently, due to about 30k in unsecured credit card debt and about 60k in IRS back taxes.

Now, the trustee recommends a dismissal and I have another court date regarding this due to not filing a tax return in 2021 (I had no income that year because I didn't work and didn't want to do the vaccine because I am too smart to trust these doctors). My health has been great, by the way. Anyway, things are going great, but I wanted to really remove this debt with the Chapter 13, but now this recommendation to dismiss. There were some other reasons, but they seem minor compared to this 2021 tax return. I have everything documented, and I am not hiding anything, so I am not worried, and I know things will work out.

My question to you all:

What happens during this meeting to "recommend to dismiss"? If I address everything, using logic and documents and facts, will the court likely tell the trustee to get lost and that my case is still good? I have about 3k invested in this so far, with the initial court and attorney fees.

Also, I am current on all of my payments.

Thank you for any feedback on this. I want to complete the case, as it will save me about 80K in the long run.

[JellyBeany]

Even if you had no income during a tax year you should still file a return. I’m surprised your attorney let you move forward with your 13 without having all taxes filed. You can still file a late return for the missing year.

[chargers777]

Thanks for your response.
I know I have options.
Yes, that was surprising (that she made no big deal about not having a 2021 tax return).
This just happened, so I have to wait until he (my attorney) opens up for business on Monday to find out what is going on.

[justbroke]

If you had no income for a particular tax year, you simply file an affidavit with the Trustee/Court. Some districts have a model form, and in other districts, your attorney files something similar to the following:

AFFIDAVIT BY DEBTOR(S) REGARDING INCOME TAX RETURN FILINGS

The Debtor(s) in this case hereby declare(s) and affirm(s) as follows:

• I/we have not filed Federal, State and local tax returns for the four year period ending on the date of the filing of this bankruptcy case for the following reasons (state the year and the reason why not filed for each such year):

[chargers777]

Thanks justbroke.

My hearing is coming up in a few weeks, and I will keep you all posted.

I am a clear Chapter 13 because I make too much for a Chapter 7. My attorney is experienced as well, with well over 15 years, so, I expect we will figure this all out.

Its just an annoying thing to deal with, especially when I get the paperwork on a Saturday.

I guess I need to stop checking mail on the weekends !

Anymore thoughts on this? Is this common for the Trustee to recommend a dismissal so early?

[justbroke]

It is likely that the detail is in the "motion to dismiss" or "recommendation to dismiss." Usually, it's because the plan that was proposed is infeasible or the debtor hasn't contributed more money to the plan. The devil is in the details. For example, an infeasible plan may be that you proposed to pay $500/month but the plan requires you to pay $750/month. (The requirement may come from something known as the Chapter 7 liquidation test, requiring a minimum amount to be paid over a period of time. Or, it could come from not proposing to pay all of your disposable income into the plan.)

Since it's fact and debtor specific, it's too hard to speculate on the reason. I'm sure that your attorney will review it and see just what the Chapter 13 Trustee is complaining about.

[chargers777]

Thanks again.

I know that I can re file, if needed, at a later date. And, that might be a better option when I look at it all. And I won't pay the creditors anything if I decide to do that, because I don't have the money and the penalties and interest make sending money to them, a losing matter.

I expect to "win" this one. I mean, I didn't work for nearly 2 years and my experienced attorney took my case. I also have all documentation.

My concern is a corrupt trustee, but that might be my mind racing a bit.

[flashoflight]

Usually, you get a list of objections right after the 341 meeting. After that, your attorney and the trustee staff work on resolving the objections amicably via a series of emails back and forth. If it's apparent that things are not going to work out, then the trustee's motion to dismiss will be filed. For example, if all of the back taxes are priority and you don't have enough income to pay it in full within 5 years, that would result in a TMD. You don't want to let it go to the hearing on the TMD. It's unlikely the trustee did something sketchy to warrant the judge overruling the trustee. Your attorney should be working it out with the trustee sufficient to at least get a continuance.

[chargers777]

Thanks Flash.

So, that is common in a BK, the list of objections right after the 341?

My attorney will probably put me at ease this week. Getting that paperwork on a Saturday really threw me off.

[justbroke]

My concern is a corrupt trustee, but that might be my mind racing a bit.

Never heard of such a thing (a corrupt Chapter 13 Standing Trustee). They are tough when they need to be, but for the majority of Chapter 13 debtors they are to make sure you're successful. Sure, they won't let you overestimate your expenses, but I have had two Chapter 13 trustees and both said that "they" are not successful unless I'm successful. That makes sense because they don't make any money... unless I can stay in plan.

Alas, it is very common for the Chapter 13 Trustee to object to confirmation. The Chapter 13 Plan is a negotiation between the Trustee (acting on behalf of the creditors at large) and the debtor. I don't think a Chapter 13 Trustee would move for dismissal for a missing tax return (from the prior year) unless they believe that the debtor is not cooperating (11 USC 521 Duties of the Debtor).

[chargers777]

Appreciate all the feedback.

I was shocked it didn't go through the first time around, but I guess that is par for the course on a Chapter 13?

[justbroke]

Appreciate all the feedback.

I was shocked it didn't go through the first time around, but I guess that is par for the course on a Chapter 13?

Yes. I don't know of anyone that has filed a Chapter 13 Plan and had zero objections to confirmation. I suppose that there are a few, but they are the unicorn.

[shipo]

I'm a unicorn, no objections.

Of course my attorney was, ummm, "of a certain age" and had been practicing for decades, and also had worked with the trusted for many-many years; she knew what would fly with him and what wouldn't; she structured my filing accordingly.

[justbroke]

Well... our own moderator is a unicorn! So, I stand corrected, I do know of a unicorn case.

[chargers777]

Appreciate all the feedback, and I will keep you all posted on what happens. I think this important to document, to help others on here that might get discouraged by all the barriers that seem to get in the way of financial freedom.

I am definitely not going to allow the IRS or my creditors to get the best of me, after getting screwed over by this recent economic hardship via the medical community.