Trustee Objection

[aveda6]

Hello,

We had our 341 meeting last Tuesday and everything seemed to go very well. The trustee mentioned that our expenses were reasonable and we were out of the meeting within 10 minutes. We are letting go of our house and have already moved into an apartment. I stopped paying the three mortgages in January and the bank still hasn't moved forward with foreclosure.

On Friday we recieved an Objection to Confirmation from the Trustee's office. He is claiming that we should up our plan payment from $170 to $700 based on the means test and the fact that we had a large tax return for 2006. We had a large tax return because we were paying three mortgages and nearly all of our income was going to the interest on the loans. For next year, we won't have any of those deductions so we won't receive a big return.

Additionally the form stated that we cannot include the mortgage payments on the means test since we voluntarily gave up the home. I don't see how this matters since I thought the filing was based on the disposable income. I am above the means test (sort of) but when I listed all income and all expenses (rent, utilities, food, etc) we came up with the payment. If I pay the $700 that he is requesting I cannot eat and pay the bills.

I called my lawyer and he is stating that the trustee is covering himself based on some appeals that are pending in the state of New Hampshire regarding the means test. He has advised us to keep paying the $170 until the Judge provides some guidance.

I'm very confused. I thought this was all handled at the trustee level. When do I go before the BK judge? Any insight would be greatly appreciated. It is frustrating that the Trustee seemed to indicate that everything was fine and then immediately filed an objection.

[lrprn]

I'm very confused. I thought this was all handled at the trustee level. When do I go before the BK judge?

Although it is very upsetting to get a trustee objection to your plan, what you've described is typically the way it happens.

Our trustee filed 2 objections to our plan within two weeks of our 341, so hubby and I have been where you are right now. I felt like I was living my worst nightmare!

Your trustee saw something in your case that could be used to provide more money to your creditors and also deals with a gray area of the revised bk law. Sounds like you may have a Means Test/Schedule I vs J mismatch - this is a bone of contention in multiple Ch 13 cases around the country right now and happens to be one of the two ongoing trustee objections in our case as well.

What happens now is your lawyer and trustee will meet to discuss and hopefully resolve each side's differences. If they can't, then the next step is to take the matter to your bk district judge. The judge may choose to get everyone together for a pre-trial hearing to openly discuss each side's interpretation of the law in question and how it relates to your case (that's what happened in our case). If that doesn't resolve things, then the trustee may ask the judge to set a court date for an official ruling (we're still waiting to see what's going to happen in our case - we're going on a year now unconfirmed with no court date in sight).

The only time you would have to appear before the judge would be at the pre-trial hearing (ours took place in a small room at the courthouse, not in the official courtroom) and at the official court appearance in the courtroom when the judge issues his/her ruling on the trustee's objection. Your lawyer is always there with you answering all the questions, so no worries about that. We didn't have to say a word at our pre-trial hearing other than to confirm who we were when we started...go figure!

While all this legal back-and-forth stuff goes on, you just keep making your current Ch 13 payments on time every month.

Your bk district may have somewhat different ways of going about this, but the general process will be what I've described here. Be sure to check with your lawyer about what to expect in your case. Trustee objections are not the end of the world although it may feel that way right now. Hang in there!

[aveda6]

Thank you very much for your reply. It helps to know that other people have gone (and are still going) through the same process. You are correct that the discrepancy is between the I and J forms. That is where our lawyer has indicated that most of the problems arise during confirmation. I believe our lawyer sees more Ch 7 issues than Ch 13 as he was a bit suprised that it happened in our case (although he said after the fact that it was quite likely to happen).

I appreciate all the information and sharing your story. It helps make this at least a bit less stressful. This has been a roller coaster ride from the start. We were convinced we were filing Ch 13, then our filing paperwork indicated a Ch 7 (we were very excited about Ch 7) but then we met with the lawyer and he said the Ch 7 would never fly based on our income. We are just above the median income level for New Hampshire so although the schedules indicate that we are below the level with expenses, we are actually above based on gross income. This whole process is very confusing. I anticipate a very long 5 years.

Again, thank you very much....

[dovette7]

Hey there aveda6,
We too are going through the same mess you are. I understand how frustrating you feel. We are over median income by a lot...and our means test/sched j didn't match. Trustee won't confirm because law isn't clear so he said Judge will have to decide. We were also in the same boat on giving back a house, and now with renting, no interest deductions so higher taxes will be due. We had a letter from our accountant showing exactley how much we would have to pay in for the year based on these changes, how much a week additionaly we would have to pay, and the trustee accepted that proof.

Sorry your going through a hard time, especially being in limbo land.. I'm there too.

[CATCHMEIFYOUCAN]

I also had an objection to confirmation. The Means Test showed I had negative amount to pay back, while schedules I and J proved different ($800 different). Well my lawyer proposed at least $250. But that wasn't good enough for the Trustee so the Trustee set up a date with the BK judge to decide. (My situation was I had 2 Full Time Jobs, which threw me over the Median). I continued to pay the $250 for a couple of months. When I went before the judge, he said:

I don't want to get involved with deciding for or against Congress' intent on the "new laws," so my choice was:

Quit one job, you can convert to chapter 7 (from Ch13)

Submit another pay plan - most likely seeing the $800 for the next 5 years!

You have 10 days to decide

Well, the obvious choice, Quit one job.

My conversion was fairly quick, and I did not have to pay the Trustee another cent, even though I still did for that same month I converted and quit one job, just to cover my ars!

Best of Luck, CMIYC