Utility deposit--nonexempt property

[AngelinaCat]

Hi All:

I have searched and haven't found this one, so here goes:

Because we had gotten so far behind in our payments to the electric company, we had to pay them a deposit of $790.00--when we could scrape the money together to do so--in order to keep our electricity on. This is not a new account, nor a reconnect, but the same account we've had for years. We listed this deposit in our BK papers, and it is considered some of our 'nonexempt property' that we must purchase back from the BK estate. We also listed what our average monthly power bill is.

Now in the 'buy back' the Trustee is discounting this deposit to $580.00 that we have to buy back. Does anyone understand what this is all about and if so, could you explain it to us? We understand the other things on the list, but not this.

BTW, we are still having trouble paying the electric bill, and have cut back all we can, but with the rising fuel prices....

Thanks

[FreshLikeADaisy]

Angelina Cat, I understand why you had to include the payment in your filing -- the amount alone would necessitate disclosure -- but to be honest, if it were any sort of preferential payment, that would be up to the trustee to collect from the utility company. It's almost like he's treating it as some sort of bank acct? How very bizarre.

Normally, your atty would fight this for you. But I've already heard about your atty. So my suggestion would be to decline to buy it back, which will force the trustee to either get it straight from the utility or drop it.

This will, at the very least, buy you some time. If he does get it from the utility, it's not like he can just call and say, "Y'all need to cut me a check for x amount for the deposit on the Cat household account." No, he has to take legal action to recover it, because he can't close your acct with the electric company to get it, which is what they would require before they cut a check for anyone: he can't take an action that would deprive you of having electricity to your house. It seems, on the face of it, far too extreme to be legally defensible. I also don't see you being able to sign something granting him permission to seize it, because again, that would have the effect of cutting off your electricity. The only option I see for the trustee to seize that deposit is to take the same legal action against the electric company for it that he would take against any recipient of a preferential payment. And that takes time. In the meantime, you can be salting whatever you possibly can away, so that when he does obtain it, you might be able to work a new arrangement out with the electric company.

I hope one of our legal eagles chimes in on this, because if I'm wrong in any way I don't want your electricity to get cut off! And I would hope your atty could at least advise you on this, for the same reason. But in the absence of any other options, calling his bluff on it is the action that I would take, if I were in your shoes. And if his action resulted in damage to me -- such as the cessation of electricity to my house -- or even threatened to, I'd make damn sure the court knew about it and maybe even file an emergency motion to get him to back down before it actually did get cut off. Even though you have an atty, in that particular situation I would write the motion myself and file it with the court, and let the judge tell me I did wrong if necessary, but I would not entrust her to write one, file one, and charge you extra for absolutely nothing. If she can't even be bothered to show for your 2004 hearing, along with everything else you've said, she gets my vote of total no confidence, sorry.

This is the very first I have ever heard about a utility deposit being considered an asset prior to its refund, and I honestly don't think it's legit, but between the trustee and your atty, you're in a hard place to fight it. Doing nothing -- not buying it back, not closing your utility acct, not signing any release for it -- seems like your best bet to me, because it forces him to pursue it. If he can't or won't, you have your answer about its legitimacy right there, don't you.

Good luck to you!!! I really hope this gets better for you soon!!!

[AngelinaCat]

We got the latest nasty note from the IRS about our 2007 income taxes--which we promptly faxed to our attorney, whose office has YET to set up an appointment with us, or even talk to us. While doing that, I asked very specific questions about the what, why, and how of this utitlity deposit. So far no response.........