Tax refund and hopping mad

[unearthed]

We are in our second year of a chapter 13 of a 36 month plan. We were allowed to keep our tax refund last year as our car broke down and we needed a new one. We are a family of six (four boys) and we make just enough to get by most of the time. Like a lot of people we use our tax refund for the major expenses that come up throughout the year. And like a lot of people our meager savings (I mean really meager) were depleted when my husband's hours were cut a few months ago. We are scrambling to simply maintain.

We receive a letter from our trustee today requesting that we send them our tax refund after we motioned the court to let us keep it two weeks ago. I can only assume that our motion was denied.

Our roof is leaking (fairly new, unpleasant thing), I have a roaring tooth ache (needs to be pulled), etc, etc, etc. We made notably less this year than last (to the tune of about 46000 as opposed to 51,000). Half of our return is child tax credits and earned income credit. I have kids that need corrective shoes. No one in this house has seen a doctor in better than three years.

I am additionally upset as our lawyer assured me during our initial conversation that we would have no trouble keeping our tax refunds. In fact, he seemed amused that I even asked, telling me that there was a lot of misinformation on the internet. We filed chapter 13 because we were worried about keeping our home (the only payments we were current on).

Is there an appeals process for this? I live in Missouri.

[Flamingo]

With the loss of hours and income, you need to contact your attorney to look into having your Plan modified. Get an estimate to have the roof repaired, get a statement from your dentist as to your tooth and what it would cost to repair - hand those to your attoroney with a request to keep your tax refund to pay for them. The more proactive you are as to giving information/support as to hoping to keep your tax refund instead of just stating you have the expenses, can work in your favor.

[unearthed]

Thanks for the reply Flamingo. We've already sent the estimates to the lawyer as part of our motion to keep it. I am not done yet. This doesn't make any sense whatsoever. I expected to be allowed to keep part of it. And, yes, I think you're right about getting our plan modified. It's already crossed my mind. I just wondered if we could appeal the ruling.

[justbroke]

We receive a letter from our trustee today requesting that we send them our tax refund after we motioned the court to let us keep it two weeks ago. I can only assume that our motion was denied.

No, there's no way there was a hearing that fast (in two weeks on a Motion). It's usually 3 weeks to a hearing, and I'm guessing you haven't had a hearing on the matter.

As for the Trustee requesting the refund, that's standard practice in most Districts, so I don't see that it has anything to do with your Motion to Keep Tax Refund.

I am additionally upset as our lawyer assured me during our initial conversation that we would have no trouble keeping our tax refunds.

That's strange in a Chapter 13, to say that. Unless your tax refund was "factored" into your disposable monthly income (DMI) calculation, I see no reason why it wouldn't be subject to the custody and control of the Trustee.

Is there an appeals process for this? I live in Missouri.

Well, first you litigate your Motion. If you lose your Motion, then you appeal the Motion. However, I wouldn't get all upset just right now. You have some legitimate expenses for which the refund can be used. Let the process work its way through.

Sorry you learned about refunds the hard way. You may need to adjust your withholdings. I would follow Flamingo's advice to the letter.

[AngelinaCatHub]

We are in our second year of a chapter 13 of a 36 month plan. We were allowed to keep our tax refund last year as our car broke down and we needed a new one. We are a family of six (four boys) and we make just enough to get by most of the time. Like a lot of people we use our tax refund for the major expenses that come up throughout the year. And like a lot of people our meager savings (I mean really meager) were depleted when my husband's hours were cut a few months ago. We are scrambling to simply maintain.

We receive a letter from our trustee today requesting that we send them our tax refund after we motioned the court to let us keep it two weeks ago. I can only assume that our motion was denied.

Our roof is leaking (fairly new, unpleasant thing), I have a roaring tooth ache (needs to be pulled), etc, etc, etc. We made notably less this year than last (to the tune of about 46000 as opposed to 51,000). Half of our return is child tax credits and earned income credit. I have kids that need corrective shoes. No one in this house has seen a doctor in better than three years.

I am additionally upset as our lawyer assured me during our initial conversation that we would have no trouble keeping our tax refunds. In fact, he seemed amused that I even asked, telling me that there was a lot of misinformation on the internet. We filed chapter 13 because we were worried about keeping our home (the only payments we were current on).

Is there an appeals process for this? I live in Missouri.

First, get on PACER and see what the Court has said. Yes you may appeal. In fact, if it were me, I would address the Trustee with the fact of the matter just the way you explained it here. Secondly, and I only speak for myself, I would ignore that request, take care of your teeth, health, and required responsibilities. If your Trustee sees fit to object and get your bk dismissed, file chapter 7. You can pay through as you have been anyway. That, or reaffirm and get your discharge, screw the other creditors and the Trustee's commission. That is my opinion. 'Hub

[STofSHK]

wouldn't she lose her home, if she converts her 13 to a 7.

[AngelinaCatHub]

wouldn't she lose her home, if she converts her 13 to a 7.

Not necessarily, as they want her money not her empty house. It is called a pay through, or she can reaffirm the mortgage in which if she has real bad luck, would not be given bk protection and could get a deficiency Judgment. 'Hub

[justbroke]

wouldn't she lose her home, if she converts her 13 to a 7.

Not necessarily. I didn't read where the poster stated that the reason for the Chapter 13 was to cure arrears on the home. In the end, yes it's possible if there are arrears, there's no reaffirmation, and there's no cure for the arrears via modification or reaffirmation.

[STofSHK]

Thank-you justbroke, you answered my question.

[unearthed]

I want to thank everyone for their responses. You have been greatly reassuring (I needed that--not been a good day in general). My husband is of the same mind as Just Broke, that the process could not possibly have happened this fast. Last year our lawyer told us it could be six weeks before we'd hear anything because the courts are so far behind. So this came as quite the surprise.

It didn't go down like this then. The lawyer held our refund for us until the ruling came through. This year he told me I could hang on to it myself (just don't spend it). We never received a letter from the trustee requesting our refund last year, probably because our plan wasn't confirmed until after the tax refund was filed (?).

I think having our payments adjusted would be an excellent idea and I intend to discuss it with the lawyer.

I haven't ever used Pacer, just 13data center, but went ahead and joined just now. I will have to wait for the password stuff to come in the mail. Meanwhile I'm in a holding pattern until my lawyer gets back to me. My husband is of the mind that we will simply keep the money until we get some clarification and then go from there.

Our house payments are the only thing we aren't behind on--and never have been. It is an older place (cute though) and the payments are low and easy to handle. It will be paid for in 2011.

The lawyer (young guy, decent enough but perhaps inexperienced) really did tell me that he didn't see that we'd have any trouble keeping our tax refund.

We will file an appeal if necessary.

[STofSHK]

I'm glad to here you can keep your home. Good Luck!!!!!!!!!!!!!!!!!!!!

[CCB35]

My trustee stated in her paperwork ,how the income tax refund would be handled.In northeast Tn district-we are allowed to keep anything under $1500 .the rest goes into the plan.
you might find this info in your packet of bk materials

[unearthed]

The only thing our trustee said in our paperwork was that we were supposed to report income changes and tax refunds were on the list of items included. He did not specify what we were supposed to do with them otherwise.

[Nanzee]

I was told the trustee gets it (NY) - but we still have not been confirmed, as I have an object by the 2nd to our lien strip, and we are filing our taxes next week. I will ask our attorney, of course, what to do with the refund before confirmation. I assume he will tell us to write out a check to the trustee, but honestly, I don't know yet.

[unearthed]

Update: I like the secretary at the lawyer's office well enough. She's friendly and personable. But they really need to teach her to say either "I don't know" or "I don't have that information" or some variation.

We spoke with her first on Monday morning. She stated that it sounded like the trustee had denied our request to keep the tax refund. She told me that we should bring in our returns, the refund, and the letter so the lawyer could decide best how to help us. I explained that I had already sent in our return (which was how I assumed the trustee knew about our refund), that the lawyer had told us we could keep the return in our own account, but I'd be happy to bring in the letter. When I asked about the window in time (which turned out to be about two working days once I looked at a calendar) she said that the trustee was bouncing information back very quickly at the moment. She also said that it had been filed according to what she was looking at. I asked about the possibility of an appeal and she said that she didn't think there was such a thing. I then knew she was probably wrong and asked (very, very nicely) to speak to the lawyer. She stumbled a bit at that point, but agreed to pass the message along.

The lawyer was happy to call us back. The motion had been drafted, but not filed yet, though they had sent the trustee the return. Hang on to the refund, he said. We'll file the motion in the morning and we'll know something within twenty days. He seemed optimistic that we'd get to keep at least part of it, though they took it upon themselves to increase our quote for a couple items on the list and that concerns me a little.

I checked Pacer this afternoon (which I only just now joined) and learned that they did indeed file this morning. I'm impressed. For me information is comforting.