Letter From Trustee

[butterflywings]

Our lawyer told us not to worry about our refund, he said he could exempt it in lieu of homestead. We've already filed and will spend it before we actually file on neccessities, bills and insurance. Even though we get a large refund ($5000+), he didn't seem very concerned at all.

Lindsay, the NY exemption in lieu of the homestead is only $2500.
Are you filing individually like me so that the other $2500 not covered by the exemption is legally your dh's portion?

[dp1969]

dp,
At your 341 the trustee will ask if you owe ANYONE money, or have made payments of over $600.00 to ANYONE in the last 90 days. This includes family and friends and the trustee will tell you so. They should have been included in creditors!

Well, that's a bunch of c**p! My lawyer should have been more concerned with that...on an ethical standpoint. Sorry, didn't mean to sound so harsh but I would have included them in the filing.

I'll just pray that our attorney notices that we've had an extreme change in our employment and deductions from 2006-2007. Went from a household income of $80k/yr to $60k and raised the only income to 5 deductions. Last year, we received $6k back but I'm sure it will only be a couple thousand this year.

[wjnicki]

I wonder if they can take the "rebate" that I will get. I filed before I got married. Can they take all of it or a portion of it.

[Cali]

Okay, but wouldn't those people you owe money to be considered creditors? I would think that your BK could be dismissed for not including them as such and that you would not be allowed to pay them until you are discharged. ???

EP

You have to know how much to up your exemptions. There is a page about this at the IRS website.

We have our exemptions to such, that we will get very little back. IMO, it is better to get your money during the year instead at the end of the year.

And it is legal to do.

[FreshLikeADaisy]

Just as an aside, anyone who has unused wildcard bankruptcy exemptions can use them to keep part or all of their tax refund, even if the trustee wants it. You have to amend Schedule B to include the refund as an asset, and amend Schedule C to apply the bk exemption, and of course the Summary and Statistics pages at the front of Form 6 (schedules) to match. You can amend your schedules at any time your bankruptcy case is still open. If your bk case is already closed and you have not heard from the trustee that they want it, you're probably safe anyway.

If you have not yet filed, and you want to keep your refund, have your atty include it as an asset in your bk filing and exempt it accordingly.

Just FYI.

[dp1969]

Just as an aside, anyone who has unused wildcard bankruptcy exemptions can use them to keep part or all of their tax refund, even if the trustee wants it. You have to amend Schedule B to include the refund as an asset, and amend Schedule C to apply the bk exemption, and of course the Summary and Statistics pages at the front of Form 6 (schedules) to match. You can amend your schedules at any time your bankruptcy case is still open. If your bk case is already closed and you have not heard from the trustee that they want it, you're probably safe anyway.

If you have not yet filed, and you want to keep your refund, have your atty include it as an asset in your bk filing and exempt it accordingly.

Just FYI.

So, where in Schedule B would we amend it? Again, my lawyer didn't want to hear of an "possible" refund but after itemizing our exemptions, I clearly see we have $4k left from the homestead & wild card. CA has a large amount to work with. I would like to maximize it. I can change it even after my 341 (next Tuesday)? Here's the breakdown:

$20,000 (value of 1st vehicle)
-$8,900 (loan remaining)
$11,100 (equity after loan)
-$3,300 (CA vehicle exemption)
$7,800 (take "in lieu of homestead")

$7,000 (damaged boat value)
+$3,000 (2nd vehicle value)
$10,000 (take "in lieu of homestead")

$10,000
+$7,800 (amounts from above)
$17,000 (Total "in lieu of homestead" exemption)

$21,825 (CA homestead & wild card exemption)
-$17,800 (Grand total exempted)
$4,025 (left for exempting an 2007 taxes)

[FreshLikeADaisy]

DP1969, I'm sorry I haven't been on in a couple days.

Basically, you "amend" (redo) Schedule B to include it as an asset, and you amend (redo) Schedule C to list the exmptions you are using to call it non-exempt.

It's not so much a "where in Schedule B" but a "When I redo Schedule B entirely, I will place this in the same area as my cash on hand and bank accounts." I haven't looked at the form in a while, but you would place it with your liquid assets. When I did my Schedule C, I did it in the exact same order as Schedule B so that I would not get confused, and so I recommend that.

On Schedule C, you only put the dollar amount of the exemption you're using on that asset, and if you are using more than one exemption, you list them separately right underneath each other, placing the dollar amount used next to each specific exemption. So in the numbers you gave, you'd have to figure out what part of that $4025 was from which specific exemption, so you could list it properly. Here's a hypothetical example where you are trying to exempt a $6000 tax return with your $4025 in unused exemptions, and hypothetically you have $2025 unused in one and $2000 unused in the other:

   Description of Property  |   Specify Law                      |   Value of Exemption   |   Current Value of Property   |
                            |                                    |                        |   Without Deducting Exemption |
   [b]2007 Tax Refund[/b]          |[b]homestead exemption reference[/b]       |[b]$2000[/b]                   |                               |
                            |[b]wildcard exemption reference[/b]        |[b]$2025[/b]                   |[b]$6000[/b]                          |

On the subject of amending forms: some districts allow an add/subtract sort of amendation, where you refile the original form, but the only thing it has on it is "ADD:" and then you list the one item you are adding, or "DELETE:" and you name the item you are deleting. Many other districts require that amended forms be recompleted, redone entirely, and it is filed as it would be normally. Unless you know for a fact that your district is cool with a partial amendment (the add/delete kind) then count on redoing that entire form. Maybe someone else can come in with better advice on the courthouse end of things, but that's my understanding of it. Good luck!!!

[dp1969]

Thanks FLD,

This is not on our Schedule C...again, my attorney didn't want to hear of a refund. Now, I've noticed a discrepancy on our Summary of Schedules which upon calling him...he told me not to worry about it. Here's my post:

http://www.bkforum.com/showthread.php?p=139752#post139752

Can I amend the "tax refund" issue after the 341 or would it raise a "red flag"? If we have to change the SOS to match the "actual" schedule I & J, can I also do the schedule C at that time. I had looked over & over my paper work and just noticed the discrepancies.

I'm really upset at this right now but if this can be amended, then I will be honest with the trustee and tell him my intentions.

DP

[FreshLikeADaisy]

DP, I read your other post and yes, I absolutely agree it should be corrected. PaKettle had the same thing happen a few weeks ago and posted extensively about it, you may want to search for that thread because it has the exact same info you would want to know, including how he had to deal with the situation when the atty couldn't or wouldn't call him back prior to the 341.

My personal opinion is that I would not ever place myself in a situation where I had to say yes under oath to something I knew was actually no, and the 341 gives you the perfect opportunity to bring up the discrepancies yourself as well as notify the trustee that you will be receiving a tax refund and amending your schedules to both correct the discrepancies and exempt at least part of the refund. So when he asks you the "true and correct" question, you say no, he will look somewhat shocked (as will your atty) and then you briefly explain the nature of the discrepancies and point out that you only just spotted it recently. This approach gets you completely off the hook in terms of suspiciousness, keeps you from committing perjury, makes your atty quite aware of it (if you are unable to speak with him prior to the 341) and worst case scenario, your 341 gets continued for a couple weeks, which may or may not happen.

And then you would make ONE amendment to your filing, consisting of Form 6, which you may as well redo in its entirety since there are so many changes, and the pages that are still correct you copy and insert (such as Schedule F) as is. Less chance of confusion at the courthouse and for the trustee that way, I think. But that's just me.

But regardless of what happens, don't perjure yourself and say yes when you know it's a no. I am betting that this will not be the very first time your trustee has seen an atty get the #s on a filing wrong, so try not to worry too much.

Good luck!!!

[phoenyx]

. . .So when he asks you the "true and correct" question, you say no, he will look somewhat shocked (as will your atty) . . .

I would love to see the trustee's reaction to finally hearing someone say no to the question he's been asking for years.

I totally agree with Fresh, it's ultimately your bankruptcy, and you're ultimately responsible for getting it done correctly. No reason to risk losing your refund over bad attorney advise, especially when it can easily be exempted.

[PaKettle]

I would love to see the trustee's reaction to finally hearing someone say no to the question he's been asking for years.

I totally agree with Fresh, it's ultimately your bankruptcy, and you're ultimately responsible for getting it done correctly. No reason to risk losing your refund over bad attorney advise, especially when it can easily be exempted.

Well, in our case, the Trustee did kind of stop in his tracks when I told him, "No, there are some things left out of the petition". He said "What?" and I went through the 3 things that were wrong with our petition. The Trustee made note and said that my attorney should amend the petition accordingly.

Other than that it was no big deal. I finally was able to get with my attorney like 10 days later and I signed some papers re the amendment and that was that - hopefully. I'm STILL waiting for Discharge, now even though it's been over 60 days.

However, there were a couple of minor mistakes on the petition that I did NOT bring forth because the attorney told me it would not affect the outcome one way or the other and I was afraid if we went in with TOO many amendments the Trustee might get mad at my attorney for screwing it up so much (even though he did), so I only amended those things that might have some bearing of that they could easily find out (such as the car being sold in 07). The other things were really inconsequential according to my attorney and I agreed.

[dp1969]

First...Wellspring, didn't mean to step on your original thread.

Second, thanks Fresh...I will have an attorney (not mine) present before the 341 and I'm going to let them know that I'll be having changes made to our filing. I'm going to be honest about it as I don't want those "red flags" a risin!

Lastly, Pa...my attorney told me not to worry about it (like yours) but the figures are wrong. Not really left out but miss printed. IN fact, I found one more figure that was $1k off (exactly).

Let you all know on Tuesday.

[PaKettle]

First...Wellspring, didn't mean to step on your original thread.

Second, thanks Fresh...I will have an attorney (not mine) present before the 341 and I'm going to let them know that I'll be having changes made to our filing. I'm going to be honest about it as I don't want those "red flags" a risin!

Lastly, Pa...my attorney told me not to worry about it (like yours) but the figures are wrong. Not really left out but miss printed. IN fact, I found one more figure that was $1k off (exactly).

Let you all know on Tuesday.

Bottom line: DO what your attorney advises you to do.
When I informed mine about the typos and omissions etc., he said, "Tell the Trustee about that, but not about this", so that's what I did, and it seems to have worked out.

[dp1969]

Interesting, Pa...I'll talk to the attorney assigned to our 341 Tuesday morning.

[gophermn]

Interesting, Pa...I'll talk to the attorney assigned to our 341 Tuesday morning.

dp1969 - good luck tomorrow!!