Meansno, Discharged, Closed...NOW UST Audit

[backtoschool]

Backtoschool, glad to see your posts today. It's been a few weeks. The board missed you!

Thanks for the kind words rhuff1 and debee! It's good to be back.

[tobee43]

I'll second that. Welcome home, b2s.

i'll third that!! it's been a while!

[tobee43]

evening, all.....ok heard from the attorney. It was a random audit and does need to be completed. Nobody knows why we were closed etc. with the audit incomplete. So we have our paperwork ready whenever it's time. We didn't commit fraud, but i'm still worried about how some things can be construed. Way back in March and April we did a few things that I m sure don't look so great now that we are sitting here with BK...but we did not even have BK in mind back then at all - not even a glimmer of thought of it. We knew in the coming years we'd have a recovery and be able to settle our debts. Got sued sooner than we ever thought would happen and filed in September. So some March/April bank statements have me a little squirmy. Just have to wait and see I guess.

it's good you heard back...i'm really in the corner saying it will soon pass....i'm keeping my fingers and toes crossed it will go fine...

[drowningNIL]

ok thanks for the explanation. yah it went to cost of daily living bills etc. it was all gone by the time we filed and we never paid anything into it after we took it out because we couldn't yet repay it. as for the means test -we are over median filers, i will have to dig out that means test but if they take 7 k and figure it into our monthly income we are screwed on that front. it's pathetic then that a matter of 3 weeks would have washed this mess off our 6 mo look-back. hopfully if they do consider this income then we can work something out as you said. that's what we have a lawyer for.... we don't at this point have the money to pay back. We have no funds lying around. they gave us 'means no" as they know we don't have money month to month now to support a 13.

i feel so uneasy. the attny had really no time to discuss any of this so we are still pretty much hanging & waiting for his next move. we have our info gathered but have to write the explanations of these deposits.

thanks all.

[backtoschool]

When you move money from a non exempt account, to an exempt account it becomes an asset unless you exempt it on your petition as an exempt cash asset. I am assuming the money was transferred from the custodial account to your checking account. That money is now non exempt. If you used it to pay for bills, etc before you filed, that is fine, and the cash will not be an asset, but the transfer of the money from the custodial account to your account will have to be accounted for. Was it a loan? (It will be hard to say yes to this since you are the custodian of the other account) Was it a gift? (again hard to say yes to this since you are the custodian of the account). Was it income? The US trustee will probably say "yes". This will change your means test.

If you paid ANY of the money back into the kids account over $600 in a year ,that will be a fraudulent conveyance and will be an asset. I paid two $500 checks to my mother to help her with expenses, and that made me an asset case.

Don't panic. None of this will affect your discharge most likely, unless you were really close on the means test. And all of this can be negotiated with the trustee.

I noticed a typo in my post above. I meant to say if you move money from an exempt account to a non-exempt account, the money becomes non-exempt.

[backtoschool]

ok thanks for the explanation. yah it went to cost of daily living bills etc. it was all gone by the time we filed and we never paid anything into it after we took it out because we couldn't yet repay it. as for the means test -we are over median filers, i will have to dig out that means test but if they take 7 k and figure it into our monthly income we are screwed on that front. it's pathetic then that a matter of 3 weeks would have washed this mess off our 6 mo look-back. hopfully if they do consider this income then we can work something out as you said. that's what we have a lawyer for.... we don't at this point have the money to pay back. We have no funds lying around. they gave us 'means no" as they know we don't have money month to month now to support a 13.

i feel so uneasy. the attny had really no time to discuss any of this so we are still pretty much hanging & waiting for his next move. we have our info gathered but have to write the explanations of these deposits.

thanks all.

It will be up to the US Trustee as to whether that money will be enough to make you a chapter 13. Since it was a payout and is not really long term income, you may be fine, and that is certainly what your lawyer should argue. But if you were over the median, it will probably at least be questioned.

[drowningNIL]

that last response finally makes me feel better lol. there is nothing left. back last spring we had two expensive car leases that we were bound to - they ended and we have much cheaper cars now, our 2nd mortgage was 3X a month what we pay on it now, and more. our finances were different even back then when we had to use the kids' money to get by.

we are over median yes, but we lost a huge amount of income between 2008 and 2010, that story is told by the tax returns. we aren't hiding any money or assets anywhere. it's gone. hoping 2011 is our time to start rebuilding and not be smacked down monthly in a 13.

[OhioFiler]

I noticed a typo in my post above. I meant to say if you move money from an exempt account to a non-exempt account, the money becomes non-exempt.

Apparently, you've been gone a few weeks so your rustiness is excused.

[mitchell]

This may be apples and oranges, but when my wife and I filed, we had just cashed out a 401k from a previous employer (lost job) to pay the legal expenses. It was recorded by the 401k plan as being withdrawn on the last day of the month before the month we filed. Therefore, it factored in as income and we failed the means test.

However, our lawyer filed an Affidavit of Special Circumstances explaining the one time withdrawal, what it was used for and that we had filed a Pro Forma B22A showing that we passed the means test without the withdrawal being factored in.

Ultimately, we passed the means test. We are currently awaiting discharge.

I'm no expert, but it sounds like your one time withdrawal would be seen the same way.

[msm859]

This may be apples and oranges, but when my wife and I filed, we had just cashed out a 401k from a previous employer (lost job) to pay the legal expenses. It was recorded by the 401k plan as being withdrawn on the last day of the month before the month we filed. Therefore, it factored in as income and we failed the means test.

However, our lawyer filed an Affidavit of Special Circumstances explaining the one time withdrawal, what it was used for and that we had filed a Pro Forma B22A showing that we passed the means test without the withdrawal being factored in.

Ultimately, we passed the means test. We are currently awaiting discharge.

I'm no expert, but it sounds like your one time withdrawal would be seen the same way.

I had this conversation with my attorney about a withdraw I made from an IRA to settle my second mortgage. He wanted to wait until it was over 6 months and I did not. I cited In re Zahn 06-6072 (8th Cir. 8-14-2008) to him. He thought it might be aggressive since the 9th circuit where I am had not ruled yet, but I wanted to file then. So we did not include it on the Means test but did show it on the Statement of Financial Affairs. Trustee never blinked. On day 54 of the 60 day club.

[drowningNIL]

Thanks for the replies....

update....the attorney was going to get back to us and let us know our next move. The deadline is fast approaching. We heard nothing. So my husband called yesterday. Guess what? Our attorney AND his secretary are gone poof out of the office. No explanation nothing. They suddenly do not work there anymore. It is a group so another called the UST office for us and basically now we are on our own. Send in the info to them and wait and see what goes down.

Drowning

[justbroke]

drowning... indeed. Wow, no professional courtesy to even contact the existing clients with open cases? Wow! Unprofessional.

[drowningNIL]

drowning... indeed. Wow, no professional courtesy to even contact the existing clients with open cases? Wow! Unprofessional.

right. can it get any weirder? (probably, unfortunately) i am so curious what happened and why they are so suddenly gone without a word. my husband drove over today to meet with the one that called the ust office for us and he kind of hoped for some explanation but there was none given.

their office thought our case was closed - it is - so I guess that's why nobody there contacted us to follow up on the audit. And to them it's no big deal. just send in the info. we are discharged and closed and they haven't heard of an audit messing that up so I have fingers crossed.

[tobee43]

Thanks for the replies....

update....the attorney was going to get back to us and let us know our next move. The deadline is fast approaching. We heard nothing. So my husband called yesterday. Guess what? Our attorney AND his secretary are gone poof out of the office. No explanation nothing. They suddenly do not work there anymore. It is a group so another called the UST office for us and basically now we are on our own. Send in the info to them and wait and see what goes down.

Drowning

i have heard some really bad ones but this is so unprofessional and inexcusable behavior for anyone in the legal field..actually any field for that matter.

i would call the bar assoc. and see what can be done...just an inquiry as to what they may suggest???

[Wantmypeace]

Unbelievable! I don't know what else to say!