The Trustee or our Lawyer?

[ekorB]

So who do we report to? The Trustee or our Lawyer?

When I first started doing my research, everything I read said that if you get a raise or a bonus the Trustee can take it. When I presented this to my lawyer he said the Trustee will not be concerned about any raises or increase in income after we file. He's only concerned about the money we had on the day we file. The lawyer said that I could send him a notification about an increase, but he probably won't take any action on it. This conversation was over 2 months ago.

A week before our 341 I emailed our lawyer and told him that I got a $6k bonus and a 5.5% raise. He said it won't have any impact on our case.

When we went into our 341 meeting the Debtor's Education instructor said we should filter everything through our lawyer. Keep in mind, the instructor works for the State Bankruptcy Administration.

The instructor even gave an example of a lady who lost several thousand dollars because she reported an increase directly to the trustee rather than to her lawyer. Had she gone through her lawyer, she would have been advised to keep the money. His message in this story was that our lawyers are on our team and know what the law is and that they also have a working relationship with the trustee.

So the questions are, if we act on the guidance of our lawyer are we off the hook? If the trustee comes back and questions our actions can we simply say..."well that's what my lawyer told me to do?"

[lrprn]

So who do we report to? The Trustee or our Lawyer?

You don't "report" to anyone. Your trustee confirms then administrates your Ch 13. Your lawyer represents your interests to the trustee and bk court during your Ch 13.

So the questions are, if we act on the guidance of our lawyer are we off the hook? If the trustee comes back and questions our actions can we simply say..."well that's what my lawyer told me to do?"

Your lawyer is far more knowledgeable than we forum members could ever be about what's going to fly during your Ch 13 with your trustee in your local court. You are paying your lawyer for legal advice - it's best to follow it.

There's a wide variation about how reactive trustees are about income increases during Ch 13. I have to say that during the three years I've been an active member here in the forum, I don't remember a single Ch 13 case where an income increase or bonus received AFTER filing caused a monthly Ch 13 payment to go up or for the trustee to take the extra cash.

Although the sums you mention seem like large ones to us, to your trustee they may hardly be worth going after once he/she goes through all the legal motions to get the funds and disperse them to creditors.

It's easy to believe that our trustees sit around minutely examining all of our 13 cases and changing finances - nothing could be farther from the truth. They just don't have the time, especially now with the explosion of filings as the economy has tanked. Your trustee might glance at your tax returns once a year, and that's about it.

The best thing you can do is keep making your monthly Ch 13 payments on time and stay under the trustee's radar. If you are still truly worried about this, then put the bonus into a new savings account. That way if your trustee ever asks for it (about the same chance as your house being hit by a meteor tomorrow ) you can hand it over. Otherwise, use the bonus as an emergency fund to handle the inevitable unexpected problems that will arise over 5 years in your Ch 13.

[ekorB]

Thanks LRPRN. I'm currently waiting for my plan to be confirmed. I actually feel pretty confident in what my lawyer has told me. Everything he has said will happen...has. I'm just learning to relax a little and put a little more faith into what my lawyer says rather than the war stories I've been reading here and on other sources.

[goldnsun]

Same here

Our lawyer told us the exact same thing, said we won't even need to show tax returns for the years to come either. Our 341 is just a few weeks away.
I'm trusting in the lawyers knowledge since it will definitely be to our best interest. Let's keep our fingers crossed.