excess assets, what happens?

[WanabeFree]

First off , I love this site I just found it a few days ago and its been a great resource of information.

My question has to do with possible excess assets in a ch7 BK. I live in Ca. and will most likely be using the 703 plan that allows for up to $21,825.00 worth of any type to be excluded over and above the normal things like household items worth less than $525 and 1 car worth up to $2550. This is in lieu of the regular Homestead exemption for renters or persons that have no home equity.
I am trying to protect a 14 yr old motor home and a 9yr old pickup plus some cash in accounts and about 4k in accounts receivables from my self employed business. When I run the numbers I am real close to being over the exemption limit and am afraid that the Trustee will want me to give up some of it such as my accounts receivables or cash in banks since its the most liquid.
How long after you file and then have your 341 meeting do you have to satisfy any claims against assets. Do you get to choose which assetts to give up or does the trustee just claim the cash first? Say I want to redeem something like the motorhome instead of turning it over, How long do they give you to do so? does a claim against assets prolong the actual discharge of debts or does it just prolong the actual final closing of the case. Just wondering how these things go. I will not able to see an attorney until I get my 2009 taxes prepared so I have all the latest financial information, this could be another 30 days or so.

[WanabeFree]

Guess my questions are not that interesting ?

[DebtStinks]

Not really 100% sure on this... we were no asset here in CA and used the same exemption system as you since we didn't have equity in a house to protect.

But I do know that YOU get to choose what you want to exempt with that wildcard. So if you want to be sure your savings and accounts receivable are protected then you use the wild card for that. If you run out of exemptions then everything that didn't fit is fair game for the trustee. So if you are short on exemptions leave off whatever is lowest on your priority list. If it's something that the trustee doesn't feel would sell easy or is more trouble than it's worth they will just pass on it and you keep. Other times they will try to cut a deal and say ok give me 1k cash (from your exempt savings) and you can keep the truck. You'll just have to see what they do.

So just protect the stuff that you really need or want to keep and then hope for the best on the rest.

[ApresMoi]

The car exemption in CA is 3,300, not 2,550. Some websites have outdated exemption amounts, but the one below appears to be current. The 21,825 total you mentioned is correct. That's the 20,725 plus the second wildcard of 1,100.

http://www.fileyourbankruptcy.org/703-california-bankruptcy-exemptions.html

First off , I love this site I just found it a few days ago and its been a great resource of information.

My question has to do with possible excess assets in a ch7 BK. I live in Ca. and will most likely be using the 703 plan that allows for up to $21,825.00 worth of any type to be excluded over and above the normal things like household items worth less than $525 and 1 car worth up to $2550. This is in lieu of the regular Homestead exemption for renters or persons that have no home equity.
I am trying to protect a 14 yr old motor home and a 9yr old pickup plus some cash in accounts and about 4k in accounts receivables from my self employed business. When I run the numbers I am real close to being over the exemption limit and am afraid that the Trustee will want me to give up some of it such as my accounts receivables or cash in banks since its the most liquid.
How long after you file and then have your 341 meeting do you have to satisfy any claims against assets. Do you get to choose which assetts to give up or does the trustee just claim the cash first? Say I want to redeem something like the motorhome instead of turning it over, How long do they give you to do so? does a claim against assets prolong the actual discharge of debts or does it just prolong the actual final closing of the case. Just wondering how these things go. I will not able to see an attorney until I get my 2009 taxes prepared so I have all the latest financial information, this could be another 30 days or so.

[AngelinaCat]

I'm in Florida, so our exemptions were much different than what you will be allowed. In our case, we were ruled an 'Asset' case, because we had a little too much stuff that was not covered by the exemptions. Florida exemptions are not all that great anyway.

We were offered the chance to buy our stuff back from the BK estate by the trustee, otherwise he would have put it up for auction. He did offer us a discount, and he got a better deal offering our stuff back to use than he would have from some stranger. Anyway, we paid $450.00 a month for 12 months to buy our stuff back. We could have let it go, but these were some family heirlooms and such.

Good luck!

[WanabeFree]

I'm in Florida, so our exemptions were much different than what you will be allowed. In our case, we were ruled an 'Asset' case, because we had a little too much stuff that was not covered by the exemptions. Florida exemptions are not all that great anyway.

We were offered the chance to buy our stuff back from the BK estate by the trustee, otherwise he would have put it up for auction. He did offer us a discount, and he got a better deal offering our stuff back to use than he would have from some stranger. Anyway, we paid $450.00 a month for 12 months to buy our stuff back. We could have let it go, but these were some family heirlooms and such.

Good luck!

Thanks AngelinCat,

That is exactly what I was asking. One other question though is did the 12 mos purchase delay your discharge or close dates ?

ApresMoi.

I caught that difference in auto exemption after I posted. It is because I mixed up the other plan A 704 exemptions with the plan B 703 exemptions. You have to use one or the other and can not mix them.

Thanks

[AngelinaCat]

Thanks AngelinCat,

That is exactly what I was asking. One other question though is did the 12 mos purchase delay your discharge or close dates ?

Thanks

It did not affect the Discharge date, but DID affect the Close date.

This is because the trustee could not finish administering the bk estate until all available funds were in so he could disperse them to our creditors. In our case, the major creditor was the IRS and they got the bulk of whatever we paid in. A couple of medical creditors objected and tried to get their claims put ahead of those of the IRS--yeah, right! Those had to wend their way through the system of going befor the judge and all of that, and the judge eventually threw them out because they didn't have a legal leg to stand on.

We were Discharged on Aug. 13, 2008, and Closed on Nov. 3, 2009.

I hope that helps.

[WanabeFree]

What about IRS debts & excess assets.

Another question,

Suppose we have say $5000.00 in excess assets & suppose we owe the same $5000.00 in back income or self employment taxes.Would the trustee just use our excess assets to pay off the IRS first since they have priority over most anything else anyways. If that is the case it would sort of be the best of both worlds since we would have to pay them eventually anyways and that is were we would want any excess to go anyways. We would then be able to most likely keep everything else and move on. If this is true I would not want to pay anything extra to the IRS until we file so as to preserve our cash or receivables to pay the Taxes and then going forward be free of the IRS debt too.

[DebtStinks]

Another question,

Suppose we have say $5000.00 in excess assets & suppose we owe the same $5000.00 in back income or self employment taxes.Would the trustee just use our excess assets to pay off the IRS first since they have priority over most anything else anyways. If that is the case it would sort of be the best of both worlds since we would have to pay them eventually anyways and that is were we would want any excess to go anyways. We would then be able to most likely keep everything else and move on. If this is true I would not want to pay anything extra to the IRS until we file so as to preserve our cash or receivables to pay the Taxes and then going forward be free of the IRS debt too.

Well I would guess that if those debts are dischargeable then it doesn't really matter who gets paid what. You won't owe on them after your discharge. BUT... if they aren't dischargeable then you will still owe them after your discharge and they are your responsibility. The trustee isn't going to pay anything to a creditor that you will still owe the debt to.

[AngelinaCat]

Another question,

Suppose we have say $5000.00 in excess assets & suppose we owe the same $5000.00 in back income or self employment taxes.Would the trustee just use our excess assets to pay off the IRS first since they have priority over most anything else anyways. If that is the case it would sort of be the best of both worlds since we would have to pay them eventually anyways and that is were we would want any excess to go anyways. We would then be able to most likely keep everything else and move on. If this is true I would not want to pay anything extra to the IRS until we file so as to preserve our cash or receivables to pay the Taxes and then going forward be free of the IRS debt too.

Your scenario is exactly what happened with us. We owed back taxes for 2004, 2005, 2006, and 2007. We could not discharge the 2004 taxes, because we had requested and gotten an extension for filing that year and the 'window of opportuniy' for us to be able discharge 2004 was not there.

Anyway, what the trustee did collect from us, once he got paid his fees, etc., went to the bulk of the 2004 taxes with a little being applied to 2005. The two medical providers were left out in the cold.

[DebtStinks]

Your scenario is exactly what happened with us. We owed back taxes for 2004, 2005, 2006, and 2007. We could not discharge the 2004 taxes, because we had requested and gotten an extension for filing that year and the 'window of opportuniy' for us to be able discharge 2004 was not there.

Anyway, what the trustee did collect from us, once he got paid his fees, etc., went to the bulk of the 2004 taxes with a little being applied to 2005. The two medical providers were left out in the cold.

I don't get it... the trustee took assets from you bankruptcy estate (over your states exemption limits) and applied that to a debt that wasn't getting discharged and would still owe after the bankruptcy was dismissed? Wouldn't that be like them paying on my student loans or anything else that can't be discharged? I wouldn't think that those debts would be the responsibility of the trustee since those creditors aren't losing anything (you still owe them the money).

[AngelinaCat]

Well, it might help put it into perspective if you know also that we discharged about 36K on one MasterCard; 5K on another one; 13K on an automobile loan that 'Hub co-signed on for an acquaintance who defaulted on paying, and we were being sued for; about 3K of a loan from American General; and unknown amounts of medical bills owed stemming from a couple of accidents that we both had prior to filing. Oh, and also a harrassment civil suit from a cyberstalker.

I do agree that it does look odd for the trustee to take funds from us to pay our Income taxes. But that is essentially what a Chapter 13 is when you are on a payback plan to your creditors, with the trustee administering your funds.

I call our Chapter 7 a 'razeed' or 'cut-down' Chapter 13.

[DebtStinks]

That's cool... just trying to understand it.

[backtoschool]

From what I can tell from my own case, the money gets applied to your creditors based on the size of that creditor's portion of the total debt and the priority of the debt relative to the rest of your debt.

My trustee took his fees, and then applied the few hundred that was left over to my creditors, with my non-dischargeable student loans getting the lion's share of the money.

[DebtStinks]

Wow that's awesome... I worked hard to make sure we were no asset. But I wouldn't have been that worried about it if I knew they would use the money to pay off our student loans.