Anyone have experience with RSUs during a CH 13 ?

[goon]

I am in a CH 13 in AZ (only filed in April of this year). I have the opportunity to accept an RSU (Restricted Stock Unit) grant from my employer. What this essentially means is that I would be given x shares of company (publicly traded) stock. (this is not like an option where I would have the option to buy at a certain price, in this case I would simply be given the stock)

These would vest over a period of time I would actually receive y shares every quarter. When they vest they would automatically sell enough shares to cover the taxes on the vested amount at current market value.

So this is probably going to be a district/trustee specific question, but would this be treated as income such that the trustee would expect to get the value of the stock in additional payments to the plan? Anyone been in this scenario (did some searches and didn't find anything). Lawyer isn't sure as he has never run into this specific scenario before.

Trying to decide if I should accept the grant, on one hand worst case I could sell the stock to pay the trustee if he demanded to receive that value (ie if it was considered extra dmi). The only risk would be the stock price dropping between receiving the vesting and the trustee demanding payment (triggering sale of the stock).

I could accept the grant, and right after each vesting sell all shares and stash the money in case I have to pay it?

Or I could not accept at all.

At current stock prices the $ value would be around $1300 a quarter for three years. Obviously the value of a given quarters vesting would vary based on stock price at time of vesting.

[lrprn]

Have you talked with your bk lawyer about this yet? Because of the wide variation in how Ch 13 trustees treat situations like this across the country, how your trustee may react to getting stock from your employer is most reliably answered by him/her.

[goon]

Thanks for the reply

Yep, talked to the lawyer. He said that he had never run into this situation (receiving stock outright from employer during a 13). but he told me to accept the grant and not worry about it, it "should" be ok..... But from some of the things I am reading here and some of the things that he has said I am beginning to see that my lawyer is one to push bounds where ever he can (a "what can we get away with" kinda guy). thou he has yet to steer me into trouble...

So guess I was just looking for any second opinions from anyone that might have had a similar situation. To make sure that wasn't some caveat he didn't know of since he hadn't directly run into this situation before..

[goon]

Wow, I almost forgot that this site existed, my BK was over, done with, and off my record it feels like forever ago now.
To answer the question, I accepted the RSU's, and had no consequence toward my BK. The information was not in any way withheld or hidden from the trustee... that said I should quantify that there ended up being some (I believe) unique things about my case... (bear in mind this was over 10 years ago now, so some of the details might be a little fuzzy)

I had a mortgage on a house that I was giving up, if I remember correctly I owed close to $200k (some of that was a first and some a second mortgage) and because of the crash in the housing market the bank sold the house at auction for $40k or something ridiculous like that. The primary mortgage was with Wells Fargo, and was the largest reason for my filing BK to begin with. Well here is the weird thing, WF never actually filed a claim with the trustee, I fully informed the trustee of the debt, obviously, and it was included in my BK. But, because they never actually filed a claim, the trustee didn't pay them a dime.

(I don't understand why it happened this way, my initial understanding was that I basically had filed a claim "on behalf" of Wells Fargo, and that they would get paid anyway whether they filed a claim themselves or not.... But I was not about to look a gift horse in the mouth, I did what I was supposed to in regards to the BK filing...)

Over the course of the 5 years, I paid over $115k into the plan. As a result, at the end of the 5 years, after accounting for all the filed "claims", and the trustee fees and what not, I had not only paid everything (except the mortgage) back in full, but if I remember correctly, I actually ended up getting a small check back from the trustee (or my last payment was less or something like that... it's been over 5 years ago now).

The reason this may be relevant is ... it is entirely possible that specific to my case the trustee simply did not care about the RSUs (but he may have cared in a different case). Because by the time that the RSUs were a factor, he would have known that all of the claims were going to be paid in full by my plan payments. As such, going after the RSUs would have been more hassle and paperwork for him with no upside at the end of the day (If I remember correctly the trustee % was based on what got paid to claims, not what was collected). As such it is entirely possible that my RSUs being ignored by the trustee is not typical, I don't know.

On a side note I believe that my lawyers view on this at the time was that on CH13 cases ( in particular 5 year plans) that the Trustees seldom, if ever, even bothered worrying about extra income or raises once the plan payments were established... except in cases where there was still going to be extreme write-off at the end of the day. They just had too much going across their desks in general to be worried about it and in general the CH13s ( especially the 5 years) were not the ones trying to "pull a fast one", and typically if they were already getting 5 years of payments there was little, if any, ROI for the trustee in even keeping tabs on income, as long as the plan payments were being made. But also remember as I said above, I felt after the fact like my lawyer was a bit of a "Maverick" so to anyone else reading I would take this with a grain of salt.

Also as a point of clarification I did not start receiving the RSUs until I was well into my plan payments...

Sorry for the long answer, but figured the detail was important, instead of just saying that I got to keep them (thou I have since sold them, but that is another story)

[imtryingtho]

Thanks! We are just starting our chapter 13 and my husband’s RSUs are an exemption. However when some of them vested this year they were taxed of course and tacked onto my husband’s “income” on his paycheck. The trustee is now objecting to our plan saying we need to pay $1600 more a month.

[justbroke]

I can't believe that goon actually responded after a 10 year hiatus!

[imtryingtho]

Just an update on this...

Our attorney filed a reply to the objection and was very thorough in what our income is and why the way the trustee calculated our income was erroneous, referencing 11 U.S.C. §1325 and Official Form 122C. There was no mention of the RSUs, just that the method the trustee used didn't work as my husband was making overtime at the start of 2020 and that the trustee used periods that were out of range. It's clear what my husband's paycheck is, so we'll see. Additionally, Wells Fargo claimed our couch is a secured loan, so that was moved.

I gathered medical documentation and that was quite the task... I'm still not sure if we'll get all of it approved. Our medical expense line is $480.

Anyway, I'll let everyone know how the trustee responds. Our attorney takes everything in stride. It was a bit stressful getting the objection over the holidays though because he was out of office and our confirmation hearing it supposed to be on the 12th. Most likely it's going to be moved now though.

[imtryingtho]

2 monthly payments down, 58 to go!

[justbroke]

It reads as though your attorney is clearly on top of this. Confirmation objections are entirely normal and par for the course. The Chapter 13 Trustee is earning his/her keep -- so to speak.

[flashoflight]

It would be extremely unusual if you didn't get any objections to confirmation. That's how common they are. Almost everybody gets an objection.

It's scary how medical can rise fast even with insurance and FSA. My medical is higher and we didn't have problems with the trustee after submitting receipts.

[imtryingtho]

Update: trustee accepted our explanation of income and all of our medical documentation and we just got our confirmation declaration to sign! It’s looking like we won’t have to make any changes to the payment amount. I am SO RELIEVED. That was scary for a second. So thankful for our lawyer. Our confirmation was pushed to February.

[justbroke]

Now it's time to keep your head down and off the Chapter 13 Trustee's radar. You don't want the Chapter 13 Standing Trustee to wake up in the morning thinking about you!

[imtryingtho]

Omg sorry I thought I was commenting on my post 😂