100% payback, then a major increase to income

[Slingerland]

Good afternoon! I have a somewhat complicated question and I would love to hear if anybody has seen something like this.

Please assume the following: a post divorce petition for C-13. 60 month period, 100% payback. First 12 months at $1000, then child support ends and the child support amount is rolled into the remaining 48 months at $1800. All based on the current tax withholding, done conservatively, keep my head down, etc. Assume that the petitioner has to turn over tax returns to the trustee, but not the refund.

Rental houses are involved. Before the divorce the combined incomes exceeded the passive loss limit and the losses have been carried forward. But now due to divorce, the petitioner's income is below the passive threshold and the losses may be taken. So going into year two of the C-13, the petitioner gets a massive tax refund (like say $10k.) And it looks likely to get similar refunds the remaining years of the C-13 payment plan.

So... in the best guesses of the folks here... what kind of things could happen? I'm thinking the following:

Option 1: the trustee simply ignores it. The petitioner is in a 100% payback after all.

Option 2: the trustee demands part or all of the refund to reduce the payback period.

Option 3: the trustee takes part or all of the refund, orders the petitioner to redo his W-4 to reduce the monster refunds, and increases the monthly C-13 payment, thereby shortening the payback period.

Any other ideas?

Thanks!!!

[toojerm]

I'm 53 months into a 100% plan, and the trustee has never asked to see a tax return. I also relocated and received a relo package, income has gone up, and received bonuses. Trustee has never asked for any of this. As is, my 100% will be paid back nearly 3 months early.

[despritfreya]

If you are a 100% Plan it is not going to be an issue. However, you may want to advance pay to get out sooner rather than later.

Des.

[Slingerland]

Thanks, Des!