Federal Tax Refund while in a CH13.

[spidge]

This year we will receive a sizable Federal refund. With 11 payments in our 13 to go all federal and state taxes have been paid that were included in the plan. We still owe post filing federal taxes from two years ago and last year our small refund was kept to offset some of it. I am sure the amount owed outside the BK will be deducted from the refund and the rest sent to me.

My question is what are the odds the trustee will allow us keep the money to use for the Adversarial Proceeding that the judge requires in order to complete our lien strip? They will not include the cost of the AP in the ch13.

[LadyInTheRed]

Does your plan say tax refunds must be turned over to the trustee? Do you have to send your tax returns to the trustee?

[mylife]

It depends. We have to surrender ours as well, but we kept it the year we had a baby because I was out of work on maternity leave for a period and our income was reduced. The trustee had mercy and allowed us to keep it that year and not pay it back.

[spidge]

Thanks sharing your story mylife, and yes Lady we are required to send them in.

[LadyInTheRed]

Thanks sharing your story mylife, and yes Lady we are required to send them in.

Refunds or copies of tax returns? If both, then talk to your attorney about contacting the trustee and requesting that you be allowed to keep the refund to pay your attorney fees.

[Pandora]

My question is what are the odds the trustee will allow us keep the money to use for the Adversarial Proceeding that the judge requires in order to complete our lien strip? They will not include the cost of the AP in the ch13.

Spidge. You have 11 payments left and you haven't had your AP yet to strip your 2nd?! Holy hell! I'd be in a total panic at this point in the game! What is the reasoning your lawyer has given you as to why they've waited until now to do so?

[dmc-2008]

Pandora when is the AP usually done?

[LadyInTheRed]

A lien striip is usually done at the beginning of the Chap 13. My court requires that the order valuing lien be filed before confimration. I believe Spidge had a change of judge and the new judge changed the rules. At least that is what is attorney told him. I wonder whether the judge reviewed the case and found that the attorney didn't follow the rules in the first place.

[dmc-2008]

Oh thanks! I am a long way off but sure don't want to mess with my strips! Thanks!!!

[spidge]

The judge in my case did change and is the only one on the west coast from the info I can find that is requiring an AP be done in order to complete the strip. I was told the figures from the original lien strip which was paid for up front and was approved the day before my 341 would be used. The judge wants the AP so that the lender will not come back at a later date to attempt to collect or neglect to complete/record the dead with the county records. This way I don't need the lender to do anything. I will be able to complete the records without them from what my attorney is telling me. Sounds expensive but $2k for the added peace of mind is fine by me. I don't think the attorney did anything wrong with the original service of notice, but rather the lender failed to respond. With that in mind the judge wants the service guaranteed so there is no question and the strip can be perfected.

I am in a hurry to have this AP done, but the stars must align first. The mortgage company must modify first which I hope will be completed next month. This way the BK payments will be current, the mortgage will be current, the job with the income is secured, and then I will start preparing for the AP and completing my second debtors class as required.

Almost there. Staying patient, but excited at the same time.

My hopes for this thread was for people like mylife to share their experiences. I understand that rules are rules and I am not getting my hopes up, but if there is a chance I will seek to keep the tax refund to offset the cost of the AP. If the answer is no then I will look for alternatives. Even though my hardship has now passed I may seek some consideration as a result of it.

Thank you all for your responses, like'm or not. Its good info.

[LadyInTheRed]

There is a chance you can keep the refund. It really depends on the trustee. You need to talk to your attorney about it.

The lien strip issue still boggles the mind. Do you mind saying what district you are in? I'd like to read their local rules.

[mylife]

This is the first I've heard of an AP and we are having a lien stripped as well. I'm trying not to be concerned.

[spidge]

There is a chance you can keep the refund. It really depends on the trustee. You need to talk to your attorney about it.

The lien strip issue still boggles the mind. Do you mind saying what district you are in? I'd like to read their local rules.

Central District of California.

One thing that I do not understand is why the change after I already committed to the plan three years earlier with the understanding the strip would be done upon discharge. I understand maybe establishing the rule on new cases but not on those of us in the middle of our case.

Thanks for looking.

[Pandora]

I'm still astounded that an AP is this late in the game given they can take months to get through. Seems so very strange as ours, like LITR and most lien strips from what our attorney told us, had to be done prior to confirmation.

Keep us posted spidge...

[LadyInTheRed]

This is the first I've heard of an AP and we are having a lien stripped as well. I'm trying not to be concerned.

Don't be. Spidge's experience is not the norm. A lien strip motion is an AP in some courts and not in others. If it is an AP, there is no need to be concerned. Maryland procedures are very clear. See local Rule 3012-1 on page 16: http://www.mdb.uscourts.gov/sites/de...localrules.pdf. Just monitor your case to be sure your attorney follows the proper the procedures.