Need Help Understanding, please.

[kakdbass]

I'm going to try to word this as to not confuse myself or readers.

We filed for C13 in June 2011. The total of all allowable claims including secured, priority, unsecured, attorney and trustee fees equals approx. $33,600. Our bar date has passed. All of our secured and priority debtors filed claims. After we have made all payments over 60 months we will have paid $33,029.

My question/concern is this... We get approx. $4k back in tax refunds annually due to job and medical expenses, etc. The paralegal has told us that we need to surrender our refunds with an exception of $600 to the trustee each year (this is in our plan). She said the base plan will be increased by this amount and would pay other debtors.

This is the part I don't get. If our regular plan payments are pretty much going to pay off all the debtors, then what is the point in increasing the plan base? Also, I asked her if we would pay off early considering our tax refunds would ultimately pay an extra $20k into our plan and she said "no, there's no such thing as paying off early in bk".

I have no issues sending in the refunds and doing things by the book, but I just want to understand the process.

I've asked more times than I can count for our ATTORNEY to call or email us but to no avail. We haven't spoken to him once throughout the entire process. I have little trust in this paralegal considering she has given us so much conflicting information.

Sorry this is long and a rant, but I just want to understand.

[Flamingo]

I'll try to explain it a bit briefly....Your tax refunds increase your disposable income each year and since your Plan is based on your income, etc. when you filed, creditors are entitled to those additional funds during your Plan and the Trustee will usually take all or a portion of inheritances, lottery winnings, tax refunds, etc., etc. to distribute to those creditors. Those extra funds paid out increase the percentage of your Plan. For example, during our Plan my father-in-law passed away leaving a small inheritance for my husband. The Trustee took 1/2 of that inheritance. Our base plan percentage was about 52% and when our Plan was completed we had paid back 64%. Does it now make a bit more sense to you?

Your Plan was worded to ensure those funds were collected and those funds increased the percentage payout of your Plan to creditors. Those funds do not reduce the amount of your original Plan but are paid over and above the original Plan amount.

[LadyInTheRed]

Your plan ends after you have made all 60 payments OR pay all allowed claims. If the payment of your refund causes allowed claims to be paid off early, your case should be closed early. But, in no event should you stop making plan payments until your attorney or trustee tells you to stop. Any overpayment will be refunded to you later.

The reason you have to continue to turn over tax refunds even after you turn over enough refunds to make up the difference between your plan base and your allowed claims, is that if you suffer a permenent loss of income before the end of your plan, your plan may be modified to take you back down below a 100% payoff.

[kakdbass]

Thanks for the replies. Your explanations make sense.

I guess the paralegal saying the increase in the plan base would go to pay 'other debtors' and that plans can't be paid off early is what is causing my confusion. Considering as it stands we are paying back so close to 100%.

I also just received another email from her saying we only have to send in $2400 out of $4900 of our tax refund to the trustee. No explanation for the change in amount. I'm really not trying to be argumentative with this woman, but I'm about to the brink.

[keepsmiling]

[QUOTE=kakdbass;563217

I also just received another email from her saying we only have to send in $2400 out of $4900 of our tax refund to the trustee. No explanation for the change in amount. I'm really not trying to be argumentative with this woman, but I'm about to the brink.[/QUOTE]

Now there's some GOOD news
be happy for that unexpected bonus.
lotsa folks here wound up having to continue to pay until the tt dotted all the i's and sent their refunds... eventually.

[kakdbass]

Now there's some GOOD news
be happy for that unexpected bonus.
lotsa folks here wound up having to continue to pay until the tt dotted all the i's and sent their refunds... eventually.

Yeah, good news. Except it's hard to trust her credibility. Considering 1) She told us wait until March and if the trustee doesn't ask we can keep the entire refund. 2)We have to send in all but $600 per our plan. 3) We can keep only $700 using state exemptions for dependents and now 4) We can keep $2550. All this over a course of two months.

I'm going to send in the $2400 tomorrow to the trustee and pray that she hasn't misled us. Regardless, it's all in savings with the exception of the $600 that I know we are allowed to keep per our plan.]

I have all email correspondence between myself and the paralegal saved.

Reassurance from our attorney, who is supposedly the professional, would be great. Ultimately this is my fault for not thoroughly checking out the law firm.

[LadyInTheRed]

Since you filed in June 2011, part of your 2011 refund may have been exempt, which would explain why you only have to turn over half of it to the trustee. It may be that you will have to turn over future refunds over $600. From your list of things the paralegal has told you, it sounds like you may be confusing what she has told you about (1) keeping the portion of the refund that was an asset on your date of filing and (2) keeping your ongoing refunds which are income during your plan. Of course, without knowledge of all of the details and reviewing your petition, I am guessing at possibilities.

In any case, as long as you keep enough savings to pay the trustee in case you are receiving incorrect advice, you should be okay.

Have you emailed or called the attorney directly instead of asking the paralegal to have him contact you? If you have and haven't received a response, I suggest you send a certified letter asking him to contact you. There is no reason you should not be able to get confirmation directly from him that the paralegal is giving correct advice.

[kakdbass]

Since you filed in June 2011, part of your 2011 refund may have been exempt, which would explain why you only have to turn over half of it to the trustee. It may be that you will have to turn over future refunds over $600. From your list of things the paralegal has told you, it sounds like you may be confusing what she has told you about (1) keeping the portion of the refund that was an asset on your date of filing and (2) keeping your ongoing refunds which are income during your plan. Of course, without knowledge of all of the details and reviewing your petition, I am guessing at possibilities.

In any case, as long as you keep enough savings to pay the trustee in case you are receiving incorrect advice, you should be okay.

Have you emailed or called the attorney directly instead of asking the paralegal to have him contact you? If you have and haven't received a response, I suggest you send a certified letter asking him to contact you. There is no reason you should not be able to get confirmation directly from him that the paralegal is giving correct advice.

Regardless, I feel my confusion is justified. A call from the attorney would be reassuring (maybe). The tax situation is not the first issue we've had with this paralegal. It is what it is. I have way too long left to be stressed out eight months in. The trustee will get the last amount she told me to send him and we'll go from there.

[LadyInTheRed]

Regardless, I feel my confusion is justified.

I didn't meant to imply otherwise. Your frustration at not having direct contact with your attorney is also justified.

[kakdbass]

I didn't meant to imply otherwise. Your frustration at not having direct contact with your attorney is also justified.

Since you filed in June 2011, part of your 2011 refund may have been exempt, which would explain why you only have to turn over half of it to the trustee. It may be that you will have to turn over future refunds over $600. From your list of things the paralegal has told you, it sounds like you may be confusing what she has told you about (1) keeping the portion of the refund that was an asset on your date of filing and (2) keeping your ongoing refunds which are income during your plan. Of course, without knowledge of all of the details and reviewing your petition, I am guessing at possibilities.

In any case, as long as you keep enough savings to pay the trustee in case you are receiving incorrect advice, you should be okay.

Have you emailed or called the attorney directly instead of asking the paralegal to have him contact you? If you have and haven't received a response, I suggest you send a certified letter asking him to contact you. There is no reason you should not be able to get confirmation directly from him that the paralegal is giving correct advice.

I hit send before I completed my message and I didn't mean to come across with an attitude.

Yes, I have called the law firm and he's never in. Left messages with no return calls. I have sent emails to the email addy on his business card and the paralegal replied. lol. It's over 100 miles round trip to his office so just dropping in would probably be useless. Sending a letter certified is a very good idea though!

I know paralegals that know the law as well, if not better, than the attorney. So I don't want to come across as downing paralegals. Personally, I think she is in charge of the show and has more cases than she knows what to do with. There's been times she has gotten us mixed up with other clients. This is obviously a 'bankruptcy mill' I'm dealing with. I now know not all bk attorneys are created equal. Lesson learned.

Yes. I have all but the $600 in savings so if the trustee asks for the remainder, we're in good shape.