Letter from Trustee

[KSL]

I received a letter from my trustee that said I had 10 days to hand over my income tax papers and refund. Then there is a place to sign. Am I supposed to sign this and send it back? I haven't even filed my taxes yet, I don't have all my W-2's. How much will they take of my refund? My attorney told he would only take a portion, and this letter says he wants it all.

Can someone enlighten me on this letter please. And... what happens if I didn't get it signed and returned within 10 days? Is it 10 days from receipt?

There is no other instructions on this paper other than to hand over my tax papers and refund within 10 days which I don't have. Help please!!!

[daylate]

I'm guessing you have 10 days from when you get your refund...from my understanding, how much he will take depends on when you filed-if on Sept 30, then he would be entitled to 3/4 of it-(9 months before you filed/12 months in year) if at end of December or after it could be all.

[free2breathe]

If you filed on May 14th, as your signature implies, then they would be entitled to approx 5/12 of the refund. You can contact your attorney or the trustee's clerk and find out about the 10 days. If nothing else, I would think you should at least respond within the 10 days from the date of his letter explaining that you haven't filed, but that you will forward a copy of your tax return as soon as you file. Make sure you don't ask for a direct deposit of the refund. In our case, the IRS froze our return anyway, so even if we'd chosen direct deposit, it likely wouldn't have happened. Just to be on the safe side, request the refund in a paper check. You will have to send the check to the trustee (ours instructed us not to sign the check before turning it over), and then the trustee will return the amount they aren't entitled to back to you.

[ChaseDidThis]

Must be different for everybody, In our case we signed a letter like that during our 341, then when I filed taxes my attorney faxed a copy to the Trustee within 10 days of filing. I had my refund direct deposited and we got a letter from the trustee letting us know how much we owed, I then sent a cashiers check to him. We filed in September, so he took 2/3 of our refund.

[hughewil]

doesn't it also matter how much you can exempt like with your wildcard?

[free2breathe]

Must be different for everybody, In our case we signed a letter like that during our 341, then when I filed taxes my attorney faxed a copy to the Trustee within 10 days of filing. I had my refund direct deposited and we got a letter from the trustee letting us know how much we owed, I then sent a cashiers check to him. We filed in September, so he took 2/3 of our refund.

I think that's just about the only thing you can count on in bankruptcy....that everyone's experiences are different ;)
The trustees do things differently from state to state, district to district. There are a few things they must do, but it seems like so much is open to interpretation. So much of it seems so illogical.

[KSL]

The letter is dated Jan. 19, if I was supposed to reply within 10 days will I be in trouble? I am worried something bad will happen now. It says they can revoke my bankruptcy if I don't cooperate. It's not that I'm not cooperating, I didn't see the letter among all my mail and missed it. It's been barely over the 10 days. What can happen? Will it affect the outcome of how much they take? Will they revoke my bankruptcy if it's been over 10 days, or do they give you a little time. Is it 10 days from the date you received the letter? If the letter is dated the 19th, I obviously didn't get it 'til the 20th or 21st. I can definitely take care of it tomorrow the 31st, as far as returning acknowledgment of the letter. I don't know when I'll file my taxes.

[free2breathe]

The best you can do is go ahead and send it tomorrow. At least the trustee will know that you are not ignoring the request

[csonly]

I find it hard to believe why he would expect your refund in 10 days from the letter as employers, etc., have until January 31 to get your W2's out. We haven't even hit that date yet, so how can you even file without all the information you need to do so???? I'm thinking it may be a routine letter they send to everyone around tax time to be sure you know they want that refund within 10 days of receipt of the money. Did you know this before the letter? I would definitely not ignore it though and let them clarify what they mean.

That leads me to a few more questions? Why would the Trustee want your refund? Do they just do this for the year you filed or for years to come?? What do they do with the refund in a 7 since there is no repayment plan?

[ValleYum]

doesn't it also matter how much you can exempt like with your wildcard?

Our trustee did not ask for any of our refund. We used the Federal exemptions and were able to cover our anticipated refund with that.

[csonly]

Our "panel" trustee did not ask for our refund, but the UST may be a different story. I have no clue what to expect. I was under the impression that you only lose your tax refund if you do a 13. Can we get more input on this subject. Also, I hear wildcard a lot on this forum. What is that?

[ChaseDidThis]

I would sign the letter and send it to the trustee, this acknowledges that you understand you need to provide a copy of your tax returns when you file them.

During our 341, the trustee told everyone that he may request their tax returns to review (apparently your trustee is doing this), after review he may choose to demand a portion of the refund, if he does this he is turning you into an asset case and whatever money he is able to collect from you will go to your creditors, and of course your trustee as well. After reviewing your returns he may just drop it.

In our case, we were turned into an asset case during our 341 and although it didn't slow our discharge, we are still waiting for our case to close.

[KSL]

I would sign the letter and send it to the trustee, this acknowledges that you understand you need to provide a copy of your tax returns when you file them.

During our 341, the trustee told everyone that he may request their tax returns to review (apparently your trustee is doing this), after review he may choose to demand a portion of the refund, if he does this he is turning you into an asset case and whatever money he is able to collect from you will go to your creditors, and of course your trustee as well. After reviewing your returns he may just drop it.

In our case, we were turned into an asset case during our 341 and although it didn't slow our discharge, we are still waiting for our case to close.

It would be nice if the trustee drops it. But the letter says I have to turn over my whole refund, but maybe that is just so he can take whatever portion he is going to. My attorney doesn't even know if my case is an asset case or a no asset case.

What is the difference between an asset case and a no asset case? Is an asset case bad?

[Egr61]

You can't even file your taxes yet, if you itemize deductions. You have to wait until sometime after the middle of February.

[LadyInTheRed]

That leads me to a few more questions? Why would the Trustee want your refund? Do they just do this for the year you filed or for years to come?? What do they do with the refund in a 7 since there is no repayment plan?

It's only for the year you filed, or for prior years' refunds that you haven't yet received at the time of filing. If you receive a refund for the year in which you filed, at least part of it is probably a refund of money that was withheld from your paycheck before you filed BK. So, at the time of filing the refund was an asset. If you can't exempt it, it is available for distribution to your creditors.

Our "panel" trustee did not ask for our refund, but the UST may be a different story. I have no clue what to expect. I was under the impression that you only lose your tax refund if you do a 13. Can we get more input on this subject.

Some Chap 13 plans require all tax refunds received during the length of the plan to be turned over to the trustee because the amount withheld was a deduction from DMI. So, if the Chap 13 debtor gets a refund, that is additional income that should go to the creditors. This keeps a Chap 13 debtor from inflating his withholding just to lower his plan payment.[/QUOTE]

Also, I hear wildcard a lot on this forum. What is that?

Some states have wild card exemptions of a certain dollar amount that can be used for any property that isn't covered by other exemptions. For example, if you have a car worth more than the automobile exemption, you can apply the wildcard exemption to the car. Or, if you have an asset for which there is no exemption at all, you can cover it with the wildcard.