Please help!!! Chapter 13 dismissed

[angelina1]

I have currenly been paying on my chapter 13 now for 6 years. The bankruptcy was suppose to close the beginning of March. I got word last week that my bankruptcy has been dismissed because I failed to give up my tax returns from 2007, 2008, and 2009, so in turn they want a substantial sum of money. The thing is I sent my taxes in and a note stating why I needed the return. I just do not understand how this would come up now after 3 years.....and what, if anything, I can do about it. The other odd thing is they are not going for the 2006 return, which was handled the same way, I sent everything to my lawyer. Through the course of the bankruptcy I had two kids (one child had problems his first year of life and had to go through 5 surgeries within his first year of life)and the money that was left over was not enough to cover expenses, especially if any unforeseen problems occurred like needing a new washer and dryer, as well as car repairs, and increased insurance and doctor bills.
I am stressed out because I cannot beleive this has happened the last month of the bankruptcy, if I would have know this in 2008 I would have had it dissmissed and continued payments on my secured debt.
Any help would be appreciated.

[justbroke]

Since you are in Florida, you are required to not only file your taxes each year, but you are also required to hand over the entire refund check to the Trustee. You are not allowed to get direct deposit either. You then send the check along with a letter asking for portions (or all) of the refund to do necessary things. I can tell you that buying clothes or other things, are not necessary since it's already calculated into the allowed expenses. It would be for things like medical issues or a new roof or other necessary things for your home (like a new stove, but not a new pool).

If your attorney never explained that to you, or you failed to read that in your Confirmation Order, then I am sorry to be the one to tell you that you are in serious jeopardy of losing your discharge.

When you were having issues, including the medical issues with your child, I hope that you immediately informed your attorney and that you worked on modifying your Plan to fit the needs at that time. If you didn't contact your attorney or otherwise try to get your Plan modified, then that has certainly contributed to your need to use the refund. However, even that doesn't justify not surrendering the refund check to the Trustee and to await a decision.

The reason you find out so late, is because they run an audit in order to close out a case. They quickly discovered that you never actually surrendered the refund checks and let them determine whether they were going to give them back to you. I'm guessing that you never received a response to those letters? The non-response is, unfortunately, not an "okay" to proceed.

Administratively, you have not fulfilled the obligations under the terms of the Order of Confirmation and this is why your case is being dismissed. The problem is, unless you can come up with the money, it's highly unlikely that you can enter into any sort of repayment terms with the Trustee, unless it's of a very very short duration (< 6 months), because the payments can't last longer than 5 years.

I'm really sorry to read this. To come so close...

[angelina1]

did ask for amendments

Throughout the bankruptcy I did aak several time to modify the plan....problem was I was always at the minimum payback so I never could get the modification....also throughout the bankruptcy I did almost get dismissed for late payments which were late because of all the finacial issues.

[angelina1]

I never recieved anything stating I could keep the refund from 2006....but they are not going after it.

[justbroke]

I never recieved anything stating I could keep the refund from 2006....but they are not going after it.

That was the year that you probably filed. They usually don't seize that refund.

[angelina1]

paychecks

One last thing....about two years ago I allowed the trustee to take payments out of paycheck. After the payment was taken out I was left with approximately 350 dollars to take home. This did not even cover my utility bills let alone diapers....clothing....doctors....food......for two little kids. The bankruptcy was never modified after having my children. So the cost of increased insurance rates.....medical costs.....and childcare were never taken into account. The kids father is also not any help.....so I dont even get money from him to help.

[justbroke]

It reads as though you should have been out of the Chapter 13 long ago. You were trying to fund a Chapter 13 that you could not afford. I'm sorry to read this, but your attorney should have seen this and not allowed you to torture yourself.

A Chapter 13 is not meant to be punitive!

[angelina1]

Filed in 2005

[angelina1]

It was filed on Dec 31 2005......first payment was march 2006.....never asked for 2006 taxes
Thats the thing.....I used the tax returns to make up the cost of living with 2 kids. The tax return was the only way I was able to live.

[angelina1]

thanks

Thanks for your help.

[justbroke]

Angelina, if you filed with an attorney, then there were serious issues with your case. You should not require the tax returns in order to live. If this was overwithholding that was not properly accounted for in your expenses, then that was one error. However, it appears that you may have had property (a house perhaps) that you were trying to keep and that was also a strain on your budget. Do you remember what your DMI (disposable monthly income) was calculated to? I'm thinking it was negative to start with and you were already in the hole. Your tax witholdings should have been adjusted back in 2006 (early) so that there wouldn't be a refund.

Additionally, if any of the refunds were from earned income credit (EIC), then those portions of the refund(s) are not property of the bankruptcy estate. I would be speaking with my attorney immediately about all of this. It's just too sad to see this happen in the last hour.

[angelina1]

I am talking to my attorney but one of my friends suggested that I post on here to see what others said. I appreciate your help, Ive got some ideas to pass n to my attorney. And I am on my way to see how much of the refund was EIC.
And yes I did file a 13 to save my house, I was also single without kids when I filed so I was not able to file chapter 7 initially.
How hard is it to transfer to a chapter 7?

[justbroke]

It is quite easy to switch to a Chapter 7. It's done simply by notice. You may want to discuss that with your attorney. Please be aware, that the attorney will charge additional for the Chapter 7 conversion. You would also need a new 341 Meeting.

Yes, life happens even when you're in a Chapter 13 bankruptcy. Your total financial picture has changed and I hope that you're able to, perhaps, convert to a Chapter 7 and get this behind you.

[keepsmiling]

Angelina--Sending good wishes and thoughts your way that this will work out well for you.
Justbroke-- what happens to all those payouts if this is dismissed?

[justbroke]

The payouts stay. However, the unsecured creditors get to start collecting again with all the fury and vengeance allowable, while adding up all the interest and charges since the stay was put in place... over 5 years ago. Never a pretty picture.