Unique (I think) Tax Refund Question

[k2k04]

A little background on me:

Filed Chpt 13 05/09.
Paying back 100%
At least 2 creditors never filed claims ($15,000)
My plan was based on ALL of my creditors filing claims.
My plan called for me to pay $2050 per month. I told my lawyer that I couldn't afford that, so they settled for $1900 a month and me giving the TT $1600 out of my tax refund.

Currently, I'm overpayed on my plan due to the two creditors that didn't file. I received my tax refund, but had to use it to get myself out of foreclosure. I got behind a couple of months following my 341 meeting, and BofA didn't start sending me a bill for a couple of months after that. Being naive, I just started paying from that point on.

Fast forward to December. I received notice from BofA that they were going to foreclose on me. Please note that once BofA started sending me my monthly statements, I paid them monthly; however, they claimed I hadn't paid them in about 6 months! I had all my cancelled checks so that was easy to fight. Nevertheless, I still had to bring my account current, which is what I did with my tax refund.

I also purchased a new washer to replace my 16 year old one. I also had to assist my mother who was hospitalized for about a month for congestive heart failure. She almost lost her apartment because she didn't have any income.

At any rate, I do not have the $1600 to send to the TT by 4/15/10. How do I go about advising the court of my predicament? Will this be a huge deal even though I'm current and way ahead of my payment plan?

Any help will be appreciated!

[LadyInTheRed]

You are unable to comply with a court order. That's a huge problem! Call your attorney right away and let him know what's going on!

I hope your mother is doing better now. Helping her is admirable. I know you felt you had no other choice. But you unfortuntley can't afford to help her financially if you want to make it through your BK. If she needs financial help in the future and has no other resources, try contacting social services and/or local churches and charities to see if they can help. In fact, don't wait until the next time she needs help. Do the research now to find out what kind of resources are available so you'll be ready next time she can't pay her living expenses.

[k2k04]

Thanks Lady. She is currently residing with me. I've informed her that I can only offer her a place to stay as my income is limited. This leaves me with another dependent...but I wouldn't have it any other way. I've called my attorney about different issues with my income (loss of child support, wages have gone down due to no OT or bonus, and adding another dependent). The paralegals there are a joke! I'm calling on Monday to have another 1 on 1 talk with her to let her know of my situation. We shall see!

[justbroke]

I concur. You should have consulted your attorney first before spending a dime. You are under order to surrender a portion of that refund. If you had asked first this would probably not be an issue.

Trustees get request to spend tax refunds all the time... and this is nothing new for them. However you unilaterally, even without advice of counsel, went and spent it. I suggest you call your attorney and come clean. Perhaps he can get you back on track. I hope you don't get your case dismissed over this, because ignoring a court order can get your case dismissed.

Best of luck.

[k2k04]

JUSTBROKE, perhaps I didn't make myself clear. My TT does not make it normal practice to take people's tax refunds, nor do we have to have permission to spend it. It was my lawyers ideal to put in for me to pay $1600 out of my refund so that I will meet the $2050 monthly payment plan. Again, this was based on ALL of my creditors filing claims and me being on a 60 month plan. Currently, I have about 40 months to go, and I just filed last May. So, again, I'm ahead of plan.

The only thing my TT wants from everyone in his district is a copy of their return, which I've sent.

I've heard somewhere that I can petition the court to "excuse" this payment...similar to people who run into snags with their monthly payment plan and the TT excuses it, or tacks it on the end of their plan. At least that's what my TT told me during the required class.

[justbroke]

Yes, I misunderstood part of that. Yes, you can petition the court, but if you already pledged the funds to the Trustee... I don't see any difference than the Trustee asking for the funds. If your lawyer set this all up, perhaps he can fix it. I'm thinking the Trustee is still going to want the $1,600 that you promised.

[k2k04]

Thanks Justbroke, I'll see what my attorney can come up with.

[justbroke]

If you do end up having to pay it, perhaps you can get on a repayment plan with the Trustee.