Confused by trustee's objection....

[ColoradoBell]

Already had an objection from X to deal with, but yesterday rec'd an
objection from Trustee's lawyer re amounts on Form B22C.

As I understand it, this form lists what the IRS allows you to pay for certain categories of expenses.

(1) Because of my age and disability, I'm allowed to have 2 cars. One of them is an old Blazer 4 x 4 (1985) that I bought in 2004 to plow my long driveway, take out trash and manage irrigation of my 7 acres. The U-V joint broke last year (before winter) and I had to hire out the snowplowing at $2300 for the season. It will cost $2k to fix the vehicle; I had it for sale last winter no takers. I used the figures given my the IRS in line #29. TRustee objects?

(2) Lines 29 (health care out of pocket) and line 36 (HSA account)....Trustee objects saying that these expensses duplicate teh deduction on line 24B. First, I qualify for an HSA account so why is that objectionable? Second, my out of pocket is much more than the IRS allowable ...so do I just have to show evidence?????? and Third, instead of using my HSA to pay the cardiologist related out of pocket, I am saving it to pay for two needed dental implants that have been 'on hold' for many years due to X not paying for them as court ordered.

(3) line 45: charitable expenses. On my tax return I listed an amount less than 2% of my income. I kept receipts. I thought we could contribute up to 15% of income , so why is she objecting to less than 2%?

(4) I have an investment property mortgage of $3000 secured. If I default, the lender can charge me up to 10% to resell the investment. (This could nean I owe $45,000!!!!!!!) The lender is willing to reduce the payment to $1000 /mo until the development goes back online at which point I'd have a job working for the development, which seems like a win/win to me. The trustee objects, saying that $3000 /mo comes at a 'high cost to debtors creditors.' But I didn't have any creditors that weren't paid in full the last 6 monts (or last 60 years). And my payment plan shows that I am paying $1000 in the foreseeable future, not $3000.

I know that ya'll said that it is the job of the trustee to object and that we shouldn't get overly concerned. But at the bottom of her letter, she requests taht confirmation be dienied AND the matter dismissed or converted per 11USC Section 1307....Is that common? I thought an objection just meant that the trustee and my lawyer got together and hashed it out?

Sorry to be so long winded. Guess I am wondering , with the 341 this coming Tuesday, if I should bring my documents in re the above objections to the meeting?
(My lawyer didn't respond to my call on Friday)

If

[NoTomatoCan]

(3) line 45: charitable expenses. On my tax return I listed an amount less than 2% of my income. I kept receipts. I thought we could contribute up to 15% of income , so why is she objecting to less than 2%?

I had a similar objection from the trustee in our 341 status sheet (basically a list of "potential" objections that the trustee wants to discuss at the 341 - I think this is unique to my district/trustee in MI). I was absolutely shocked that the trustee objected to such a low % for us. We covered it at the 341, and it never showed up on the actual objections. If you have your receipts, you should be fine on this one.

(4) I have an investment property mortgage of $3000 secured. If I default, the lender can charge me up to 10% to resell the investment. (This could nean I owe $45,000!!!!!!!) The lender is willing to reduce the payment to $1000 /mo until the development goes back online at which point I'd have a job working for the development, which seems like a win/win to me. The trustee objects, saying that $3000 /mo comes at a 'high cost to debtors creditors.' But I didn't have any creditors that weren't paid in full the last 6 monts (or last 60 years). And my payment plan shows that I am paying $1000 in the foreseeable future, not $3000.

So right now you have a $1,000/month payment on an investment property? How/why is an employment opportunity with the development tied to you maintaining your investment with that development project? Is there any income coming in from the investment property to offset the $1,000 per month? Remember from the trustees perspective you wouldn't owe the $45,000. It would go in the plan, the asset would get liquidated, and the remainder owed to the creditor would get lumped in with unsecured. AND the $1,000 per month would get paid to all unsecured creditors over the life of your plan

Are you in a 100% payback? If not, this one seems like a tough one. The potential for future possible employment to maybe offset this $1,000 per month expense seems speculative. So on the surface, it sort of looks like you have $1,000 per month going to an investment instead of your unsecured creditors.

Maybe more info on this one would help.

I know that ya'll said that it is the job of the trustee to object and that we shouldn't get overly concerned. But at the bottom of her letter, she requests taht confirmation be dienied AND the matter dismissed or converted per 11USC Section 1307....Is that common? I thought an objection just meant that the trustee and my lawyer got together and hashed it out?

That sounds like pretty standard language. Our Objection says that "Trustee PRAYS that the Honorable Court deny confirmation". Just love picturing our trustee kneeling at Sunday Mass praying that our CH13 plan gets denied! Maybe even lighting a candle in support of her wish to deny our plan! LOL

[ColoradoBell]

Hey Tomato!
Thanks for your reply...I can understand the Trustee better due to your explanation.

I also never noticed that at the very bottom of our threads there is a 'related issue' list of other similar problems, so I read those too.

Its funny that the Trustee is basing objections on the 6 months prior when I had alimony income. That ends this month, unless I can get it modified. If it ends, then my only income is money I take out of my retirement fund to pay for all my expenses. It seems that if I agree to use exempt retirement money to pay for arrearages, minimum to unsecureds in re non-exempt assets, trustee and attorney fees, that there isn't much of a way for the trustee to be asking that I pay even more.

RE the income from the investment: the investment property is 32 acres ocean view that is to be developed into 1/2 acre lots with a few spec homes built on several of them. The development is in hiatus due to the economy. If the as yet undeveloped land was sold today, I'd have no equity as my purchase was based on the 'developed' land. I'm retired, but I was going to be the onsite manager (part time) and any property I sold would be commissionable at 10%. Lots start at $100k, so this seemed like a good way to make income. If I wasn't paying the $1000 month to my debt on the land, I can see where the Trustee would think that it would go to creditors, but since the money is coming from my retirement funds and not earned income and is discretionary, I think I might have an argument. I'd hate to lose the money I've invested so far, but I guess that's the gambit.

It seems that the trustee is basing everything on my B22 which really has nothing to do with my current situation. My B22 was negative due to the investment debt, but I think I'm ok because even taking the whole debt off, unless I get a modification of alimony, I won't have any 'disposable' income as it will all have to come from retirement money and rental income from renting out an apartment in my residence. I'm guessing that my confirmation will be held up anyway until the family court rules on the modification. ......

Again thanks for helping me understand. I think I'm ok, just as long as the case isn't dismissed before I can have the modification hearing and if necessary, a hearing before the BK judge after that.

[HHM]

1. Not sure on #1. (not enough info) as to the issue. The trustee is probably objecting that you don't really have that expense even though it is the IRS allowed.

2. HSA contributions are unsettled in BK. It is a routine objection and it is not clear whether you really can take it.

3. Standard objection, can be overcome with evidence.

4. This is the tough one and you will likely lose on this one. Maintaining an investment property that does not pay for itself is a non-starter in chapter 13. What the trustee is saying is that your unsecured creditors will receive less in the chapter 13 so you can maintain this property. The debt will be discharged in your chapter 13 should it come to that. Unless there is a way you can get someone to take over payments, you will lose this objection 9 ways to Sunday and need to devote that money to your chapter 13 plan.

Yes, your lawyer will get together with the trustee and "try" to hash it out, but the trustee still needs to file the objection.

[catleg]

Don't lose heart, they get paid to object to every nit picky thing.

Show them you have some evidence to back up your medical stuff, and offer a bit more each month for the plan.

After a few iterations hopefully you'll wear them down the same way they try to wear you down.

The trustee represents creditors, but he's also a business, looking for maximum return on investment for minimum risk. Risk to him is the cost of working the case or getting called "too lenient" by the US trustee.

As long as you don't get dismissed you're still in the game. Ch13 plans have such a low success rate that there has to be some pressure on them to "get something" rather than have everything get flushed over petty objections.

My feeling is eventually everyone will either die or lose their job and end up in a chapter 7, that's what the ch13 trustee is competing against. If they don't allow people reasonable plans they won't make anything.

[ColoradoBell]

Thanks Catleg! YOur post made me feel better

I know that if I can't make the 13 fly that I will have to file a 7 and it will be a no asset case...so everybody loses, especially the 13 trustee.

I just read something that helps me re the expenses of a 2nd car (which I'm allowed to have per state exemptions) that I'm posting here, altho maybe I should post separately:



Now to work on finding my charitable deduction receipts. Any one else put cash in church offering envelopes? AGain, I never thought I'd file for BK or need proof, and I never before carried around checks with me. Sigh.

[justbroke]

I agree with all 4 points that HHM wrote. That's what I would have posted, except for #1, I don't understand where you are allowed 2 vehicles, in the Code, because of your age and abilities.

It's probably really the investment that the Trustee is mad about. I don't think there is one Trustee that will allow you to confirm a plan where you have an investment property that is not at least breaking even. They will not allow this to the detriment of unsecured creditors.

[HHM]

I know that if I can't make the 13 fly that I will have to file a 7 and it will be a no asset case...so everybody loses, especially the 13 trustee.

This is a "fatal" assumption. The attorney's for the chapter 13 trustee in CO will object to everything and make sure the debtor cannot possibly complete the plan.

[ColoradoBell]

Justbroke: Co. Exeptions:
Personal Property13-54-102 - Bicycles and motor vehicles that are used to travel to work up to $5,000 (up to $10,000 if used by elderly or disabled debtor or dependent);
My two cars are 8 and 25 years old. The old one is 4 x 4 and my driveway is 17% grade in places. I used to use the old one to plow my driveway and to help maintain my 7 acres of irrigated pasture. I'm allowed to have up to 10,000 exeption even tho my two cars together are worth less than $6k.
The BK case law I cited seems to indicate that you can use the IRS expenses for your cars. The Trustee of course could say that I don't need both cars so she could deduct the 'expenses' for the second car, but then I'd have to add $2300 to pay for snowplowing the driveway to my expenses..otherwise, here at 9300 feet, I'd be snowed in during the winter.

HHM: We posted at exactly the same time, so I didn't comment on your first reply. I understand (from everyone's posts) that the Trustee doensn't like the investment property expense. But, I listed it as an expense on the Means Test because that was what I was paying the last 6 month when I didn't have any 'creditors' who weren't being paid in full as their debts came due. What was missing from the Means test was payments for property taxes and mortgage that was 'accruing' to me because my X was paying for it and taking the tax deduction for interest until the house sold when I had to 'reimburse him' for 60% of the payments. If I didn't deduct the mortgage for the investment property, I believe I could have deducted the prop tax and mortgage that was accruing debt to me. In my projected expenses over the next 5 years (on the Means test) I didn't lisst anything , but of course over the next 5 years I'd have home mortgage and property taxes that would end up with my still having a DMI of less than the amount I agreed to pay in my plan.

But I am totally confused re your last post...I don't understand why the 13 Trustee attorney wants my 13 plan to fail?????? Can you explain?

[HHM]

It's not that they "want" the plan to fail, it just that they are hyper strict.

My point (although I made it in an obscure way) is that your negotiating leverage with the chapter 13 trustee has NOTHING to do with their interest in being paid or that your creditors weren't being paid prior to filing bankruptcy.

[catleg]

I don't want my previous advice to be misinterpreted.

I just meant to say that it's a negotiation, and you have to choose where to compromise and where to not.

I agree the investment property is a problem.. Likewise, in my ch13 plan I proposed 0% charitable, figured it wasn't worth the fight. The health related stuff I would fight tooth and nail and bury them with receipts. Sometimes you can get them to focus on one area and lose interest in other stuff.

This investment property providing you with a job sounds kind of fishy. Are you being realistic about this? What is this, an investment in a subdivision where you hope to work in sales or construction?

If you already on disability it sounds like a ch 7 is a no brainer.

[justbroke]

Justbroke... The Trustee of course could say that I don't need both cars so she could deduct the 'expenses' for the second car, but then I'd have to add $2300 to pay for snowplowing the driveway to my expenses...

There is no such expense in the Bankruptcy Code. You could try to use a claim as "household maintenance", but when that gets to whatever yours is now, plus an additional $200/month, the Trustee will bark.

Just letting you know up front... that's all.

[milehigh]

ColoradoBell-

Just a quick FYI for your 341. We had ours in Denver a couple of weeks ago- basically it is "name, rank, serial #, etc." and goes very easy- takes less than 3 minutes. None of the objections from the letter were discussed- and we are currently in "negotiations" with the trustee via our atty on those matters. Good luck on yours- I pray it goes as smoothly as ours (and everyone else's in the room) went.

Milehigh

[ColoradoBell]

Dear Milehigh....Thank you so much for posting..makes me feel much better. Glad your 341 went so well and hope mine does too. Hope you don't mind if I pm you tomorrow re your 'negotiations' with the trustee.

Today's the day for my 341 and I was feeling ok until this morning when I realized that I can't swear under oath that I have full knowledge of everything on my schedules! It was a long day of working on them, and at the end I was having one of my a-fib attacks. I went over the papers the first time, circled things I didn't understand, had them explained, changes made, second go-over, more questions and changes, and by the time the 3rd pile printed out I was seeing blurry and couldn't concentrate.
Signed my name, left (got there at 9am and it was 6pm, hadn't eaten) and never got a copy. My attorney called the next fday and said she went over the pile and made a few changes and filed it. Still don't have a copy, tho I've asked.
I'm really strict with myself re what I say under oath....so I hope the questions re the schedules are general so I won't have to go into above details.

Wish me luck!

[mrslick]

this thread has a lot of good post. i hope you guys can help with my situation.

i'm in ch. 13 paying $786/month even though my DMI was $386, trustee said we had to pay at least 21% of unsecured debt. we recently had a baby and my wife income went down by $1600/month because she's working part time to avoid paying too much for childcare. we're behind on our mortgage by 2.5 months but we are not underwater. we owe $318k and the house assessed at $396K, we don't want to lose the house. we've asked our lawyer to convert our case to ch 7 and the trustee said that we have to catch up on our mortgage payment if we don't want to loose the house. I think the trustee just does not want to loose the 10%, because we told her that our parents can help us to pay the arears. she said no because it would not be fair treatment to the unsecured creditors, i thought secured creditors come first. my questions is, will the trustee has a say in me converting to 7 or will the case just go to a different trustee?