two questions: 1) abt Tax refund; 2) abt vehicle.

[screwedupbyRE]

1. I saw many posts with different opinion/answers. My 'interest only' mortgage payment with taxes is abt $36000 per/yr, and a general rule of thumb is you get 1/3 back, i.e. ~$12000. Can't I keep it? or pay towards the principle amount of my home loan? (btw, I have option to make I or P+I payments and I'm making Interest payment only). What if I don't inform trustee and pay towards home loan?

2. My car payment of $445 is included while calculating the mean test, but outside the payment plan (341 is on 2/11). Once my plan is confirmed, can I stop making the car payments and surrender the vehicle? what are the consequences (like impact on credit history and/or to Trustee payments)?

Thanks.

[justbroke]

1. I saw many posts with different opinion/answers. My 'interest only' mortgage payment with taxes is abt $36000 per/yr, and a general rule of thumb is you get 1/3 back, i.e. ~$12000. Can't I keep it? or pay towards the principle amount of my home loan? (btw, I have option to make I or P+I payments and I'm making Interest payment only). What if I don't inform trustee and pay towards home loan?

This varies by District in which you file. Most Districts will take the entire refund. Some will take only half, if you are married and only one of you filed. Some Districts let you keep the first $2,000.

If you don't inform the Trustee... you will learn the hard way when your plan payments go way UP!

2. My car payment of $445 is included while calculating the mean test, but outside the payment plan (341 is on 2/11). Once my plan is confirmed, can I stop making the car payments and surrender the vehicle? what are the consequences (like impact on credit history and/or to Trustee payments)?

The consequences are that your Plan and case may be dismissed. If the Trustee doesn't dismiss your case, s/he will indeed take that $445/month as disposable monthly income. Eitehr way, you aren't seeing that $445/month directly... unless your case is dismissed.

I'm assuming that you don't want your case dismissed.

Thanks.[/QUOTE]

[screwedupbyRE]

abt #2: How would trustee know that I'm not making the payments to Toyota financial services???

plan is to keep the payments until plan is confirmed. not sure if it's illegal to do!!!

Thx

[chloe0724]

The Trustee is aware of your entire finacial situation until your 13 is completed and dismissed. If you let your car go, he will be made aware.

[screwedupbyRE]

justbroke/chloe0724 - thanks for your response, but I'm still not clear on how trustee would know my financial every month!!! There's no system in place that triggers an alert for the trustee when someone stop making the payments to secured creditors that are 'outside' the payment plan.

pls help me understand/educate.

Thx

[justbroke]

justbroke/chloe0724 - thanks for your response, but I'm still not clear on how trustee would know my financial every month!!! There's no system in place that triggers an alert for the trustee when someone stop making the payments to secured creditors that are 'outside' the payment plan.

They don't know your financials every month. You are right.

What they do is, take your annual tax return, and quite simply, divide by 12. They basically take your adjusted gross income (AGI) for this calculation. (Seriously... that's what they do.) This is why they want to see your tax return every year. They may also want your tax refund every year too, but that's another story.

If you stop making payments to secured creditors outside the plan, the secured creditors have been instructed to inform the Trustee should that occur. This is why some folks get their entire case dismissed, when they miss payments outside the plan.

You have to back up. Technically there is no "outside the plan". The difference is what's paid through the trustee, and what's paid directly. It's all "in the plan" from a technical standpoint. Even with wage deduction from an employer, the employer is also instructed to notify the U.S. Trustee or the Court if any changes in the employee's (debtor/bankrupt) occurs.

While this notification system may not always work, it's intended to work this way so that creditors, who are technically "in plan" regardless of how they are "paid", have recourse.

[screwedupbyRE]

understood!!!

one more question on tax return: Say I get refund of 15k every year with my regular deductions... what if I increase my deduction (after the plan is confirmed) on w4 so that there's no tax coming back every year??? Tax return has no column that states how much deduction I was taking on paystubs (or W4)...

thx much for your reply.

[justbroke]

one more question on tax return: Say I get refund of 15k every year with my regular deductions... what if I increase my deduction (after the plan is confirmed) on w4 so that there's no tax coming back every year??? Tax return has no column that states how much deduction I was taking on paystubs (or W4)...

Basically, yes. You want to take all deductions so that you have a small refund. Leaving a $15K refund out their exposed to the Trustee is a gamble, I wouldn't take.

[screwedupbyRE]

Thanks much justbroke. this details are helpful.

My 341 is scheduled in 3 days (2/11 @ 9.30am pst). I'll keep this board posted how it goes. My attorney warns me to be prepared 'cas of my high income... secondly he screwed-up application by not submitting state tax return that has refund of $3200. According to him, I should not be worried and act suprised when asked abt state tax return. (this worries me)

on the positive note, he know trustee personally from last 18 years.

[OhioFiler]

Basically, yes. You want to take all deductions so that you have a small refund. Leaving a $15K refund out their exposed to the Trustee is a gamble, I wouldn't take.

It's also a terrible financial planning decision to loan the government $1,250 each monrh interest-free!

[screwedupbyRE]

loosing interest on 15k is better than loosing entire priciple amt.

[bksmith12345]

Absolutely. I have been doing this for years. A forced savings so to speak. If I get back 12-15K because of my witholdings. Well, Bully for me. That extra money each week would have vanished to whatever. The last week in february or first week of March has been big time for us. Maybe this past year we should have put it in the markets and lost 40%. Even so. all the past years what is the real return in each individual year? We are all her because of circumstancw, job/loss change, Income loss, or what ever.

C/on