What's involved in Chapter 13 final audit?

[golden_locks]

What's involved in the final audit?

Will the trustee review any of my personal information? Or is it more about how my payments are allocated to my creditors?

I'm 37 months into my 48 month plan - and I just re-read my initial plan. Two things I'm concerned about - and hoping (praying!) that it doesn't de-rail my bankruptcy.

1) Increased income - My salary has increased about 20 percent since my plan initiated. I submitted my income tax returns/w-2s to the trustee -
- but I never sent any additional notification of my increased income.

2) Debit/credit cards - I've been using my gas cards as debit cards - never carrying any monthly balance (always paying off the full balance each month).

Help? Do you think I'm screwed.

[aa06a47]

Nope, don't think your screwed. Think you'll be fine. Once your past 36 months under old law, they don't care about disposible income anymore anyway (Old law only required you contribute all disposible income for 3 years...the last 2 years (if a 5 year plan) was not tied to disposbile income.

Not sure about the use of a credit card... I would probably quit using it if I were you the next 12 months just in case they checked.

Do you plan on paying off early?

[golden_locks]

Whew - thanks for the post. I was a little nervous after re-reading my agreement.

Yes, I do hope to pay off early. After reading the boards, I guess I need to go talk to my lawyer to negotiate with the trustee. All my debt was unsecured debt.

I just want to make my last 11 payments in a lump sum..not 100 percent of the credit debt. Hope that'll be possible.

[bkbiker]

Hi golden locks,

Make sure you contact your lawyer first, he or she should know how your trustee might handle an early pay off.

Be ready to answer this question; we would like to know how this debtor came upon such a large amount of money to attempt a pay off of this chapter 13 case?

Why do you want to pay off early?

Good luck, bkbiker

[13inOR]

In our case, the final audit meant nothing more than making sure the money we paid in went where it was supposed to, and the overage was refunded back to us.

[spidge]

I know this is an old thread, but I am interested to know the depths of the audit. Is it simply a matter of determining that all payments have been made and the checks are all cleared? Does it include a re-evaluation of income and financial activity?

Also, is it true the DMI is irrelevant in the last two years of a five year plan? Are there any other rules that are different in the last two years of a five year plan?

[LadyInTheRed]

I know this is an old thread, but I am interested to know the depths of the audit. Is it simply a matter of determining that all payments have been made and the checks are all cleared?

Yes, at least as I understand it. If an audit of your personal finances was going to take place, it would have taken place at the beginning of your BK. That doesn't mean the trustee can't ask for your current financial info during your plan, but that is not the "audit" that happens at the end of the plan.

Also, is it true the DMI is irrelevant in the last two years of a five year plan? Are there any other rules that are different in the last two years of a five year plan?

No. That's the problem with relying on information in old threads. In 2006, a lot of existing Chap 13s were filed under the pre 2005 laws, including the OP's. The "DMI is irrelevant" comment related to the old law.

[spidge]

Thanks Lady In Red.

[kornellred]

Look at the number of reads this post from the past has caused! Apparently, there are many debtors in Chapter 13 who are doing quite well for themselves and are being reminded that it's not over 'til it's over. They wonder about being discovered.

The trustee only cares about, and only has time for, making sure that all of the terms of the Chapter 13 Plan have been adhered to. This has mostly to do with ensuring that claims have been dealt with properly, plan payments have been received on time - that sort of thing.

I have four payments left on my 54 month Chapter 13 plan. I will let the forum know about my final audit, which will be occurring within the next month or two.

[spidge]

Look at the number of reads this post from the past has caused! Apparently, there are many debtors in Chapter 13 who are doing quite well for themselves and are being reminded that it's not over 'til it's over. They wonder about being discovered.

The trustee only cares about, and only has time for, making sure that all of the terms of the Chapter 13 Plan have been adhered to. This has mostly to do with ensuring that claims have been dealt with properly, plan payments have been received on time - that sort of thing.

I have four payments left on my 54 month Chapter 13 plan. I will let the forum know about my final audit, which will be occurring within the next month or two.

So if I were to take a loan against my 401k and paid it before the 13 is finished or if I take a small car loan without asking he will never know as long as everything stays honky dory on his end? Just wondering.
Don't fret I do not plan to get a car without cash in hand.

[kornellred]

Money in a 401K account belongs to you. If you borrow from it, you are borrowing your own money and paying yourself back with interest. There is no way that a trustee could find out about a 401K loan. Technically, you are not assuming debt by borrowing your own money. However, if you can afford to pay back the 401K loan and still pay your Chapter 13 plan payment, that means you have more disposable income than was originally accounted for. I'll bet that is the case with a great many Chapter 13 filers.
I would consult your attorney before assuming that a 401K in Chapter 13 is allowed. From what I have gathered, California is not as liberal with fiscal policy as it is with social policy. Further, your attorney will know how trustees conduct their business in your state.
My own worry (if I have one) is that my own 401K loans, which I had before my Chapter 13 filing, have been paid off. There was no provision for automatically adjusting my plan payment upwards at the expiration of the loan terms. (I had 2 loans) Many Chapter 13 filers are required to have their plan payments increased upon the expiration of 401K loans, but it is made effective in the original Chapter 13 Plan Confirmation and not left to chance.

I have bought and sold at least 5 used cars ("beaters" that my sons fixed up) during the course of my Chapter 13. In most cases, transactions like this leave no permanent audit trail.