TT keeping large sum of money on hand?

[alorth]

OK.....I'm a bit confused.

TT received our Tax refund last month, which is showing on datacenter.

Now I check the ledger, and the first of the month disbursements took place to our 2 secured car creditors as always. The TT did not send them the extra cash on hand.

I thought the TT paid off the secured creditors first (which is what is happening), and then started paying towards the unsecured.

So why didn't the TT simply use the money on hand to pay off the car notes? He has enough cash on hand to do that.

I expected that was going to happen, so now I'm confused as to why he would hold on to over $5,000 and disburse only $970 as he usually does.....which is roughly what is going to him from the paychecks every 4 weeks.

Any insights?

[justbroke]

The Tee pays off the creditors according to the Confirmed Plan. Even though my submitted Plan showed that I wanted to pay the secured creditors quickly, the Trustee still made payments based on their own schedule. In fact, the order confirming the plan had those changes listed.

I would not worry about how the Tee pays things. So long as you are paying on time and are conforming to the terms in the Plan, everything is good. No one will ever understand the mystical creature known as the Tee!

[kmjatl]

OK.....I'm a bit confused.

TT received our Tax refund last month, which is showing on datacenter.

Now I check the ledger, and the first of the month disbursements took place to our 2 secured car creditors as always. The TT did not send them the extra cash on hand.

I thought the TT paid off the secured creditors first (which is what is happening), and then started paying towards the unsecured.

So why didn't the TT simply use the money on hand to pay off the car notes? He has enough cash on hand to do that.

I expected that was going to happen, so now I'm confused as to why he would hold on to over $5,000 and disburse only $970 as he usually does.....which is roughly what is going to him from the paychecks every 4 weeks.

Any insights?

Mine is doing that too. Received the regular payment and tax refund on 5/3/2013. On June 1, only the regular payment was disbursed by TT.

I also noticed that the amounts that are disbursed make no sense, so it must be according to some automated formula. Example: paying a $100 balance at $10/month. And some months there is a small amount left on-hand (maybe $10) which is added into the next month.

I checked with my attorney who said "each trustee has their own procedure for how they pay out the refunds."

Sounds to me like the TT is taking advantage of some interest float.

[justbroke]

The Trustees don't necessarily take advantage of float or interest. The (Chapter 13) Trustee's earnings are capped. I believe that a Chapter 13 Trustee's maximum earnings (pay to themselves) can be no more than a US Attorney. Their earnings are exclusive from any expenses. So they are capped at about $130K+ a year.

What I'd like to know, is where the "extra" money goes? (I'm not wondering about staff and office expense. I'm wondering about the amount above expense and then the Trustee's salary cap.)

[tobee43]

just wondering capped at what percentage jb?

i'm seeing more and more 13's over the past year, they are more money for both the attys and the ttees. question jb....what about asset 7's, do the trustees also have caps?

[justbroke]

Chapter 7 Trustees have no cap. The Chapter 13 Trustees are capped at the (senior) US Attorney salary. It does not matter what the percentage would be. In some Districts, the "commission" rate, if you could call it that, for the Chapter 13 can be as low as 5%. In Florida, the Chapter 13 "commission" rate is 7%. However, many Districts override the percentage and tack on a "float" to that percentage. For example, Florida allows the Trustees to collect 10% rather than 7% "in case" the rate changes over the life of the plan.

Strange thing, I have never really seen the rate refunded when it stuck at 7%. Specifically, I was in plan for 20 months at 7%, yet was charged 10% each month. I wonder where that 3% went? The (Chapter 13) Trustee has no real benefit after they make their $130K or so. It could be to help offset office fees, outside attorney fees, staff, supplies, rental space. I'm sure it's used for things that the (Chapter 13) Trustee needs to operate.

For Chapter 7 (Panel) Trustees, there is no cap. However, the commission they receive should be tempered by the ability to actually collect. A silly Trustee would chase down assets that they have no real way of recovering for the estate. The smart (Chapter 7) Trustee knows when to fight and when to back down! Remember, the Chapter 7 (Panel) Trustee is a regular attorney appointed to serve on the panel. Many of them have regular practices as... yup... bankruptcy attorneys. So they should know when to litigate and when to not litigate. Litigation costs money and time, so a smart Chapter 7 Trustee knows when to fight. (We have all read about the "aggressive" Chapter 7 Trustees. I always love it when they lose contested matters such as the carve outs!)

I also believe that some Chapter 7 Trustees like to make a name for themselves and establish new precedence. Otherwise, I could not explain many of the "silly" arguments made over the past several years.