Trustee taking excess tax refund....sigh..........

[BKlooker]

Got a call from my lawyer’s office today…they got an email from my trustee, and it looks like the trustee wants the excess $1,000 I couldn’t manage to get exempt on my paperwork. She offered to work out a payment plan with me...I told my paralegal that I can just pay her the whole amount outright at the end of this month, and I am waiting to hear back about it now.

I am surprised she would come back for such a small amount, especially after she already entered a ‘no distribution’ note on my account. My lawyer isn’t sure why she is suddenly interested in it, and is in the process of finding that out now.

The one catch is that I am set to get my taxes done on the 18th of Feb. We will see how that factors into her decision to take it. I am waiting to hear back from my lawyer, who was to be conveying all this to her later today.

It’s not a huge deal for me, simply because I am in the process of walking away from my home, so this month’s money that I would have otherwise put into savings instead of paying mortgage can go directly to her, but it sure does rain on my day. I am still grateful to be able to keep most of it, and not be obligated to a house I can’t afford any longer…but it just makes me nervous, being that it’s been a full 3 weeks since my 341 and we updated my schedules, so it makes me wonder what else she will chose to screw with me over.

At least the window of time for them to dispute my means test is over, so at worst she just wants a bigger chunk of my tax refund. Not a big deal.

Oy, this year is already starting out lame . I’ll be so glad when this thing is over! 5 more weeks!

[tyson24]

Yeah you have the right idea though. Just hand it over, get your discharge/close on move on. It stinks that you couldn't exempt it, but you will be in a better position in the long run.

[BrokeinMD]

That sucks, Looker. My 341 was 12/6. My trustee didn't mention wanting the tax refund at all, but your post makes me nervous. Did they make you sign anything at the 341 that you were to give it to them?

[BKlooker]

Well with my case, I get a 6K tax refund each year. With all my other accounted-for exemptions, we left the refund off my original filing to see if she would bring it up or not. At the 341, she said for my lawyer to be sure to update my schedules to account for exempting it, which we did the next day. We thought that would be the end of it….she entered a ‘no distribution’ note on my account the same day as my 341.

It turns out that with my other exemptions, I only have space to exempt $4.5K of it, leaving anything in excess of that vulnerable. Again, I am not complaining about being able to keep 75% of it, and because of the Bankruptcy, this is the FIRST year I can actually use it to help me SAVE for things I need, rather than spending it on past-due bills, my car insurance for the year, etc.

It’s funny…my car had a nasty transmission scare just last week. It turned out to just be related to over-topped fluid, which required a flush, but it’s terrifying to be halfway through a BK 7 and your transmission is struggling. My car is 8 years old and 120K miles on it, so I am looking to replace it later this year. I am happy that a good chunk of that 4.5K will go towards that.

[BrokeinMD]

I don't understand why your trustee put the no-distribution in, then asks for $1,000 of your refund. Maybe to pay herself? Let us know what your attorney says. I'm checking Pacer every day, and even though on record my trustee said he didn't want anything, and looked at me like a hopeless cause, he hasn't filed anything yet, but it seems to me, after your experience, that is a no-guarantee either of being in the clear. Yikes!

[frogger]

I am surprised she would come back for such a small amount, especially after she already entered a ‘no distribution’ note on my account. My lawyer isn’t sure why she is suddenly interested in it, and is in the process of finding that out now.

That one is easy. It's called a "commission".

[BKlooker]

The thing is there is no notice on Pacer about this. Even right now...the last filing noted was back 2 days before Xmas, the 23rd of Dec. and that was her oking the mortgage company filing the motion to relieve the stay in effect and proceed with the foreclosure. I have only checked Pacer about once a week since my 341.

This goes to show you Pacer doesn't have all the answers.....I have a feeling she can't update it until she works with my lawyer to get a plan going for how to collect the 1K and when.

But don't worry...we knew this was a possibility going into this. It's not like we had no clue that the refund would become an issue, we were just hoping for the best. If you don't have any known sticky issues with your case like that, you have nothing to worry about.

[BrokeinMD]

I had a sticky issue with a lot I own, but that was "resolved" at the 341....Ok, I'll just scrape around in my desk drawer and see if I have a stray zanex left...LOL

[tyson24]

Looker, I hear you on the car problems. We had a tranny go out out in our 2005 truck and then the motor blew in my 2002 toyota...plus the water heater...all in the middle of BK! We have kept from having to buy things because of DH's family being crafty and mechanical, but boy when it rains it pours. Hope this all passes for you soon

[BKlooker]

haha BrokeinMD....you will be fine...your discharge is in just 3 weeks....i have an extra 2 weeks past that to sweat it out. I reset the clock on my 30 days when i updated the schedules back in Dec., so she has until Jan. 23rd to keep the hits coming on me :/

Besides, you are already past the '30 day' mark, which is the period of time where you trustee can dispute your schedules and/or start to pick at stuff back from you. Your only thing left is to just pass the 60 day mark with your creditors not objecting.

and yes, Xanax has been my saving grace throughout this process. I have actually been feeling much better lately than I did when i first filed back in November, but this refund issue is certainly help rattle my cage a little bit...

[BrokeinMD]

It's a "cage rattler" for sure. Thanks for the comfort, comfort vibes to you, as well!

[chicagoannie]

Oh, BKL, this is a big worry of mine. My trustee specifically asked if I would receive a refund "in excess of $6000" to which I honestly answered "no." I am so afraid I'll get a letter in the mail (I filed pro se) asking for the refund after all.

I'm glad you get to keep most of yours, tho, that's something at least!

[BKDebby]

At my 341 in November, the trustee made every one of us sign a form that we had to send our tax returns to HER instead of the IRS this year. I usually get a refund of $1200 to $1300 so I probably won't see much of it. $1200 may not seem like a lot to some of you, but it's a lot of money to me. I wanted to start an emergency fund with it.

[chicagoannie]

At my 341 in November, the trustee made every one of us sign a form that we had to send our tax returns to HER instead of the IRS this year. I usually get a refund of $1200 to $1300 so I probably won't see much of it. $1200 may not seem like a lot to some of you, but it's a lot of money to me. I wanted to start an emergency fund with it.

$1200 to me is the equivalent of a million, seriously, so I know what you mean!

[BKlooker]

Update on this issue:

So I called my lawyer and asked for an update on this. My paralegal said that my lawyer contacted the trustee to see if he could get this slapped down on the basis that she already entered a no-distribution, and therefore doesn’t have the right to ask for the money anymore, but apparently he was unsuccessful.

He was however successful in getting her to agree that she would not hold my case over until I file this year’s taxes and not get my case bumped up into an assets case…in other words, if it ends up that my refund is a full 6K (I could only exempt 4.5K), then she won’t come for the excess couple hundred dollar’s difference between what we can’t exempt and what I actually get, and she is also not going to stop my discharge from going through.

She is giving me til the end of February to give here the $1.1K (as a certified check), which is not a problem…I will be giving it to her in 2 weeks when I get paid.

The motion for relief of stay hearing is tomorrow for my mortgage company (I am not attending), so we will see what that brings and what notations they leave on Pacer about it. I am hoping my mortgage company takes a long time to sell the house (or that I can at least work with my lawyer to egg out a few extra months of time here). In any event, it would be the first of March before they could legally get it assigned a court date, and another 6-8 weeks from there before they could hold a sale on it after securing a court date, so I think I have plenty of time to save up some money, as I am thinking the end of April/ mid May would be the soonest I need to move.

The not having to pay rent/mortgage has really helped me get back on my feet, and I am so grateful for that. At the end of this month I will have a larger cash savings than I have ever had in my lifespan, and by the end of April, I will have more cash on hand than I have ever had as a credit extension, assuming no major setbacks til then.

Praying to God that the next 31 days go by uneventful….