Trustee takes 25% of Paycheck after filing?

[Silver26]

Hello, We are scheduled to file on wednesday of next week. My attorney sent me some updated paperwork that I needed to sign and I noticed that this has been added to the exemptions sheet in huge bold letters.

I knew they could take our Tax refund but I've never heard of them taking 25% of the next paycheck. Its not a big deal at all and the 400$ is nothing for what we are discharging. It just seems weird that all of the sudden this is added on there and I've never heard of it. Anyone else know about this?

[StartingOver08]

Isn't this only a one time deduction? I don't know in which state you live, but many of the states have a 75% exemption of your earned wages, so the other 25% goes to the Trustee. This does vary from state to state.

Since you are so close to filing, make sure you have exempted everything you possibly can exempt. Check your exemptions at www.legalconsumer.com

[HHM]

Unfortunately, you sound like you have a particularly aggressive trustee. As pointed out, some trustees get very particular and literal. If only 75% of wages are exempt, the trustee IS entitled to 25% of wages. This usually affects a bank account. I have not heard of them going for the most recent paycheck.

Sounds like an issue of timing. Since the wages were "earned" on the lead-up to filing, but you get the paycheck after filing, the trustee gets 25% of ONLY THAT check. But, it will only be for that paycheck. No future paychecks.

[justbroke]

Very aggressive Trustee.

[music12]

maybe it's an aggressive district - presumably nobody knows who the trustee is until the OP actually files, right?

[PoorNow]

I dont know. I was under the impression that any money we get paid from filing until the discharge the trustee gets 25%. That really sucks because my husband is in real estate and basically hasnt had a comission since Feb, but now will be getting 2 during the waiting period after our 341. I just assumed we'd have to cut a check for 25%. How does that work exactly? Does the Trustee just take it from your bank or do you have to pay them the money?

[StartingOver08]

I dont know. I was under the impression that any money we get paid from filing until the discharge the trustee gets 25%. That really sucks because my husband is in real estate and basically hasnt had a comission since Feb, but now will be getting 2 during the waiting period after our 341. I just assumed we'd have to cut a check for 25%. How does that work exactly? Does the Trustee just take it from your bank or do you have to pay them the money?

This is a different situation. When I filed, I'm a RE broker too, all pending commissions from sales contracts as of the date of bk FILING DATE belong 100% to the Trustee. In other words, if the contract was written and accepted on or before the filing date, then the commission belongs to the Trustee. Its concered an accounts receivable. If he wrote those contracts AFTER the filing date, then the commission is yours and does not belong to the Trustee.

Make sure to check those dates.

[Silver26]

I went to my attorney today to ask him about this and he said. They can take 25% of your next paycheck after filing. He says 2 trustess out of however many take it. He says otherwise the others dont care. My attorney also said that if i have to give it I will have about 7 weeks to pay it.

[booboo]

In Oregon here, never heard of that one. I had a check come 10 days after filing, it was the next month after my filing and never had to hand over anything here. Maybe in Oregon it is different, or maybe he just did not care. Commisssion based pay, so if he had, he would have gotten over $600, but never an issue.

BooBoo

[PoorNow]

This is a different situation. When I filed, I'm a RE broker too, all pending commissions from sales contracts as of the date of bk FILING DATE belong 100% to the Trustee. In other words, if the contract was written and accepted on or before the filing date, then the commission belongs to the Trustee. Its concered an accounts receivable. If he wrote those contracts AFTER the filing date, then the commission is yours and does not belong to the Trustee.

Make sure to check those dates.

Yes, both contracts were written before we filed. That sucks. We were told he would take 25% though, not 100%. If they take 100% we are going to be starving and homeless! Also my husband has a partner and they split all the commissions 50/50. Is it only going to effect my husbands half of the commission?

[Bkman2]

I'm in real estate also. So are you saying that if you have a contract that is signed before your file date that has not closed the trustee can take all of the commission? My attorney never said anything about that.

I filed 12/28/09. I had 1 close on 12/22 and one on 12/27. I also had one get pushed to January. This was after 5 months of nothing. The trustee asked if I had any pending and I said that 2 closed before I file and the other was still contingent when I filed. He asked for my Dec/Jan P & L statements that showed the income and never asked for any of that income from me.

This was under a chapter 13. I'm looking to covert to a chapter 7 next month. I'll have to check with my attorney again because after another 4 months of nothing I just got another contract in escrow. Meet with attorney on the 9th and deal should close around the 16th. I think that will be before they convert the case. Last time it took about 2 weeks to file case.

[StartingOver08]

Yes, both contracts were written before we filed. That sucks. We were told he would take 25% though, not 100%. If they take 100% we are going to be starving and homeless! Also my husband has a partner and they split all the commissions 50/50. Is it only going to effect my husbands half of the commission?

It will only effect your husbands portion of the commission, not your husbands partner.

As to your attorney taking 25%, maybe your Trustee treats the "commission receivable" like employee wages. That would be very unusual as generally real estate agents are not employees, but independent contractors. I am assuming your husband is not an employee but is an independent contractor that gets 1099's rather than W-2's from his broker. If your husband's income is W2 type income, then the 25% would apply. You should clarify with your husbands attorney.

[StartingOver08]

I'm in real estate also. So are you saying that if you have a contract that is signed before your file date that has not closed the trustee can take all of the commission? My attorney never said anything about that.

I filed 12/28/09. I had 1 close on 12/22 and one on 12/27. I also had one get pushed to January. This was after 5 months of nothing. The trustee asked if I had any pending and I said that 2 closed before I file and the other was still contingent when I filed. He asked for my Dec/Jan P & L statements that showed the income and never asked for any of that income from me.

This was under a chapter 13. I'm looking to covert to a chapter 7 next month. I'll have to check with my attorney again because after another 4 months of nothing I just got another contract in escrow. Meet with attorney on the 9th and deal should close around the 16th. I think that will be before they convert the case. Last time it took about 2 weeks to file case.

Ch 13's are not handled the same. Make sure to check with your attorney as to what date is applicable for the converstion to a Ch7. If you have only one pending contract right now, I would certainly convert after it was closed to not risk the funds. Of course, if you can exempt the funds then it wouldn't matter. Please discuss this in detail with your attorney. Going 5 months without income and then losing all of your income to the Trustee makes it very difficult to recover. BK is all about timing.

[PoorNow]

We checked with an attorney friend of ours and he said that since its a brokerage LLC and he actually pays himself wages out of the business, it will be treated like wages and only be 25%. Thank God! I was worried about that.