$15K unclaimed - now trustee wants it

[bouvougan]

Here's my situation. We are 38 months into a 48 month play (old law). My wife discovered a couple of months ago that her deceased father had unclaimed money from his estate. The money amounted to about $15,000.00 in stock certificates. So we have the money to payoff the remaining 10 months payments due ($8,650.00 total). This not a 100% plan.

We've asked the trustee if we could pay off the plan with this money, and she said she wanted it handed over as disposable income. Our attorney has been unhelpful in giving us advice. Does anybody know what our options are here. We explained to the trustee that we also desperately need to use some of the money for a different car since mine is on its last legs and I commute 120 mile each day. Any responses would be greatly appreciated.

[lrprn]

[bouvougan, I moved your post to its own thread so you wouldn't hijack the original poster's thread. You'll get more and better answers this way. -lrprn]

Unfortuantely it was a huge mistake to tell your trustee about this money. Since you aren't in a 100% payback plan, the trustee has every right to take the $15K to distribute out to your creditors.

Chapter 13 payments are not like a loan where you pay what you owe and you're done. When you are in a less than 100% payback plan, when disposable money like this is found by the trustee, then the extra money goes straight into the bankruptcy estate. It won't reduce your payment, and it won't reduce the time you are in Ch 13 unless the $15K will pay off your creditors in full.

Even if your lawyer isn't very communicative, I so wish you had called him/her about this before you contacted your trustee directly.

The worst part is that if you had kept quiet until you were discharged, that money would have been yours. Unfortunately now it's too late. That money is heading to your trustee and there's not a darned thing you can do about it.

I'm so sorry this has turned out this way for you

[woeisme]

I'm new law, not old law, but I always heard on this board that past the 36 month mark under the old law you could do a plan payoff, even if not at 100% payback. So why can't this person, at the 38 month mark, do a payoff instead of upping her percent to unsecureds? I'm not saying you are wrong lrprn, because it sounds like from what the trustee is saying you are right, but I know I've read time after time on this board about people buying out of their old law plans after the 36 month mark and not having to up their % payback, and that people are wondering how new law will play out on that subject.

[HHM]

The problem here, I think, is that the inheritance probably cannot be exempted and therefore increases the liquidation value of the estate.

But I think Woeisme is correct, the better approach would have been to simply call the trustee and ask for a buyout.

What was the reason you are only 48 months...my guess is something needs to be paid off or there was a liquidation value that needed to met.

In any event, this may be something you can fight.

[Flamingo]

Here's my situation. We are 38 months into a 48 month play (old law). My wife discovered a couple of months ago that her deceased father had unclaimed money from his estate. The money amounted to about $15,000.00 in stock certificates. So we have the money to payoff the remaining 10 months payments due ($8,650.00 total). This not a 100% plan.

We've asked the trustee if we could pay off the plan with this money, and she said she wanted it handed over as disposable income. Our attorney has been unhelpful in giving us advice. Does anybody know what our options are here. We explained to the trustee that we also desperately need to use some of the money for a different car since mine is on its last legs and I commute 120 mile each day. Any responses would be greatly appreciated.

In your first paragraph, you state that your wife discovered "a few months ago" that this money was available to her - that would put the discovery of this money under the 36 month mark (old law) and it could also mean that she was the beneficiary of an inheritance during the course of the 13 and if that money became available, would be considered disposable income. It also may come down to when her father passed away - was it during the course of your Chapter 13 or prior? Also, this money apparently is tied up in stocks so if you did not report this as you did, there would have been a big papertrail with having that stock transferred over and if you tried to sneak around with this and that stock transfer/sale was discovered, now would not be a good time to risk the dismissal of your Chapter 13. Also that stock may be worth less than what it was in today's market so you have quite a few things to look over here and review with your attorney.

Since you only have 10 months to go, I would talk to your attorney about seeing if the Trustee would allow you to put some of that money toward a new vehicle so you can make it to work to pay off the remaining months of your Plan.

Best of luck to you and I wish you the best in this....I too travel 120 miles a day round trip commute so I feel your pain....

[2ndChanceTx]

I tend to think that if the date of death was before the 36 month mark, you are sol, if it was after the 36 month mark you wont have to pay it in.

[bouvougan]

Thanks for the information and encouragement

Sorry I had to be away for awhile and couldn't respond to every post, but I appreciate the responses. So here's an update. I spoke with my attorney today. After telling him we're in the last ten months of our 48-month plan, he said the plan confirmation called for the trustee to receive our monthly payment of $865.00 for 48 months, and all disposable income only for the first 36 months of the plan.

Our dilemma now is to figure out when this inheritance would count, since we didn't receive the money until after more than 36 months of the first plan payment, though we did hear about the money before then. He thought we had a good chance to prevail in allowing us to pay off the plan. But of course he also wants $500 up front to handle the case work and represent us in court. My fear is that we don't prevail and end up with $500 less money than before, but I guess we really have no choice but to take this before a judge. If anybody else has any ideas of what we could do, I'd certainly appreciate hearing them.

[CindyLou]

This is another example of why anyone is a 13 should just let sleeping dogs lie and pay the plan out til the end. Asking to pay off early opens up such a can of worms!!!

I'm sorry also, that is turned out this way. Hopefully you can find another way to work through it with the trustee.

[Beetle10]

I think this is a good example of why you should never contact a trustee directly. As stated many times in these posts the trustee is not your friend. His job is to get as much money as possible from you for the creditors. Your lawyer on the other hand would know how the law is applied and possibly could have gotten you an early buyout.

People please people consult your lawyer with issues like this. Bouvougan I hope this works out in your favor.