What do Trustees watch for, if anything?

[GoingUnderInNV]

What do Trustees or their staff monitor on Chapter 13's? I've heard that the get reports from the IRS every year to watch your reported income, but do they really do that? What do they REALLY watch for? Is this urban legend, or is there real experiences out there that prove they do, in fact, monitor tax records? Do they demand records from employers or banks? Any chance we that are in a Plan are just giving letting our fears get the best of us?

[CATCHMEIFYOUCAN]

My Trustee wanted a copy of my tax files every year and must be submitted withing 10-15 date of filing. He also wanted my bank statements (just the 2 most recent months prior to Bk) I'm to assume he would see if there is anything "shifty," happening by looking at your tax files. I can only assume you are under a watchful eye especially if you have assets.

Best wishes, Catchmeifyoucan

[lrprn]

Here's what our Ch 13 trustee told us he expected us to tell him about or send him during the 5 years of our plan:
* copy of our annual tax returns
* amount of our annual tax refunds (if any)
* any increases in income from any source
* sale of property
* need to incur new debt (ex: unexpected hospitalization, car or home needs repairs, need to buy a car because of an accident, have to move because of job change, etc)

If the trustee sees something suspicious anywhere along the way (ex: your income on your tax returns is significantly higher than what's on your filing schedules), then he/she will start digging deeper into your finances. They can ask for accounting from your checking and savings accounts, income records from your employers, etc. back for a year if needed. If the US Trustee gets involved, then the records request can go back for up to five years and you must comply with whatever they ask you to produce (think the IRS....very similar nazi-like approach).

The key is to never arouse the trustee's suspicions to make him/her think they need to look at your finances more closely. If your trustee has clearly stated their expectations (ours gave his to us on a fluorescent bright pink laminated sheet! lol!), always comply with what's expected. Most important - always, always make your monthly plan payments on time!

[HHM]

Typically, the trustee just wants to see tax returns for each year you are in a Chapter 13.

[Gone to Texas]

Here in Texas the trustee has been very laid back. No tax returns required and you only need to report a "material change" to your income. I interpret that as 15% net.

There are no other requirements.

Texas has always been known for it's debtor-friendly ways. It is why people from other states used to write GTT (Gone to Texas) on their doors when they were escaping their debt burdens.

[GoingDown]

Here in Texas the trustee has been very laid back. No tax returns required and you only need to report a "material change" to your income. I interpret that as 15% net.

There are no other requirements.

Texas has always been known for it's debtor-friendly ways. It is why people from other states used to write GTT (Gone to Texas) on their doors when they were escaping their debt burdens.

That was interesting.

I've actually considered moving to Texas because of the fact that they are far more debtor-friendly than most states, and they don't garnish wages, so I could work at any ordinary job and not have to worry about wage garnishment.

[Gone to Texas]

That was interesting.

I've actually considered moving to Texas because of the fact that they are far more debtor-friendly than most states, and they don't garnish wages, so I could work at any ordinary job and not have to worry about wage garnishment.

That was a huge benefit in the couple years before I filed Chapter 13. Plus Texas allowed me to keep my 401K and had a whole host of other other exemptions. I might be wrong but I think Texas and Florida are the two best states to file bankruptcy.

Call it what you want but I am quite proud of Texas' stand against creditors.

[ez2bgramz]

Going under, we're in Nevada and from my research there's 3 chapter 13 trustees here. We've dealt with 2 of them.. the one we deal with now seems to be a hard nosed guy! LOL.. (for lack of better word!).. my suggestion to you right off the bat would be to immediately get a "pacer" account so that you can see exactly what is filed and when it is filed.. our trustee raised our payment by $46 and we were not notified of that increase for 2 months. Trustee filed for dismissal. We were able to make up the difference and continue with our 13, but not without almost having a coronary... now i check pacer every so often and i print out what is filed so that i know what to look for in my mail box! Don't mean to scare you anymore than you are, just thought i'd pass that on..

sincerely,
ez

[dac67]

I have not been asked for anything as of yet. Our trustee as of yet has not given us rules to live by. We had our 341 in May an have payed almost 9 months of a 36 month plan. We shall see after the holidays and with tax season approaching if he does want to see our tax returns.

[GoingUnderInNV]

Thanks for your replies, guys. Well, my trustee hasn't notified me of anything that he expects, but my case hasn't his the "last date to file claim" yet, so anything could be coming down the pike. I don't have any assets to be of interest to anyone, and don't plan to acquire any in the next five years. ;) I supplied all of my tax records and paycheck stubs as requested when I filed, so presumably he has a grasp on my spending and income.

If I were to get a raise, what's the threshold at which a trustee's ears perk up (so to speak)? Presumably there would be a one year lag before a trustee might show interest, but are the person's tax records the only that the Trustee has access to? I didn't specifically grant him access/rights to my employer or bank records, but do they have automatic access to it? Under what conditions would he request such access, and would he have to go to a judge to get that access (hence a document in my PACER case, or would it be elsewhere)?

Curious, because I just found out I got a year-end raise, when I specifically stated in my filing that I did not anticipate a raise this year (which is true). Instead of being thrilled at getting a raise, I'm now wondering if that might just screw me up worse than I already am.

[CATCHMEIFYOUCAN]

That was a huge benefit in the couple years before I filed Chapter 13. Plus Texas allowed me to keep my 401K and had a whole host of other other exemptions. I might be wrong but I think Texas and Florida are the two best states to file bankruptcy.

State of Virginia, your 401k is exempt from Bk too ! ! ! I had about $600 bucks going into my 401k and the Trustee never questioned why it was so high (as that could be disposable income!)

Just my 2cents, Catchmeifyoucan

[lrprn]

If I were to get a raise, what's the threshold at which a trustee's ears perk up (so to speak)?

This can vary widely from trustee to trustee, but if no expectations have been shared with you, a good rule of thumb would be to report a sustained 10% increase over your filing income or any bonus, tax refund, etc over $1,000 (these were the widely accepted "trustee pays attention" levels under the old bk law).

The new bk law doesn't designate any specific % increases or one-time $ amounts, so trustees can pretty much set whatever levels they want. You can be lucky and get a trustee who doesn't want to know anything, or get one that wants to know EVERYTHING. It's mostly luck of the trustee draw...sigh...nothing like having 3-5 years of your life completely dependent on some vague, un-regulated individual trustee whim.

Ask your lawyer what the trustee pattern has been in your district and follow that.