Trustee wanting 25% of our wages & tax refund???

[basketsbears]

Trustee in his capacity as Chapter 7 trustee of this bankruptcy
Proceeding, hereby notifies the Court that there are possible assets in this case,
Administration of which may result in a dividend to creditors. The Clerk’s office is
requested to issue a Notice of Last Day to File Claims pursuant to Bankruptcy Rule 3002
(c) (5).
NOTICE IS HEREBY GIVEN that all scheduled assets will be abandoned from
the estate EXCEPT Debtors’ nonexempt interest in 179/366ths of their FY 2012
federal/state tax refunds, funds on deposit and 25% of wages due and owing as of
the date of this bankruptcy filing.


What does that mean? Does that mean we won't be discharged or closed until next year after taxes are filed??? What I don't understand is we didn't have any savings, etc. What is going on? The last day for them to file claims is next week.

Our bank accounts date of filing totalled $61, 25% of my earnings was $421.25 maybe another $100 from another job; our 2011 refund was $3,285. Our refund will not be that big, as I am barely working at all right now, but that being said, 1/2 of that is $1,642. I think Indiana exemption is $600? So all this for just over $1,000????? - And probably not even that much???

I am so upset. I have been waiting for this to be over. My husband says don't worry about it, that it will work out. I am at my wit's end right now. (Major stressors, daughter gets married in 9 days, other daughter has baby due in 11 days, midterms now in grad school, my hours have been cut, so I've been scrambling around trying to pick up hours).

Thanks for letting me vent. I am just really po'd.

[HHM]

It really isn't that big of a deal, and I am little surprised that this seem to be coming as a surprise to you.

It is tax refund season for the chapter 7 trustees. Pretty much from September on, if the debtor showed a tax refund in the prior year, the trustee is going to keep the case open until you file your taxes. And since they know they are getting the tax refund, it is only a few more keystrokes on the computer to get the other, misc assets like a percentage in the bank account and earned, but unpaid wages, due at filing.

Here is one issue...did you actually claim the exemption for the tax refund on your petition. If not, you need to amend.

As long as you get your discharge, that is what matters. I know the above is a hassle, but it is not the end of the world...and frankly, should not have come as a surprise.

[pamkev]

Oh Lynn I feel for you. We are waiting also our thirty days are up Monday for anyone to file a claim

Pam

[justbroke]

It will work out and as HHM mentioned, the discharge is the prize! The other things are typical things that Trustees get. Yes, they will do this for $1,000 because they are tasked with getting as much for the unsecured creditors as possible. The Trustee will only earn about $250 from that $1,000.

[basketsbears]

Thanks - calmer minds prevail.

HHM - I really don't know if there was an exemption filed for the tax refund. I had thought since we filed in June, and it should be finished this month, there wasn't anything more to do - certainly not anything with our 2012 tax refund. So really 1/2 of the tax refund basically, less any exemptions will go to the trustee.

So does that mean our discharge won't be until 2013 after our taxes are filed? Or will we get discharge, but not actually "close" until after first of year? I have heard about cases being "open" and discharged, but in practical terms I am not sure what that means.

Thanks again so much for all the help. It just took me by surprise. I was looking for discharge, not expecting this.

Thanks everyone for helping me through all of this. I feel better just having all of your support.

[basketsbears]

Oh Lynn I feel for you. We are waiting also our thirty days are up Monday for anyone to file a claim

Pam

Thanks Pam. I feel we need to meet and have a drink or something (or 2 or 3 drinks!) ha!

[TheBajan]

Thanks Pam. I feel we need to meet and have a drink or something (or 2 or 3 drinks!) ha!

ditto that!

[btbeme]

A little bit interesting in that your filing was in June. I would absolutely expect a filing in Sept - Dec to get caught in the tax refund trap. June seems a bit early, but that really depends... Simply put, if you have received a substantial refund due to over withholding the last couple years AND that withholding has not changed for the year in which you file Ch 7...I guess that I would expect a Trustee to take a closer look.

And as HHM says, if the paycheck came a few days after filing, it is easy picking if there is some other motivator.

We might be talking about only a thou or two here, but that is exactly the Trustee's job. But June? Sheesh...

[HHM]

btbeme

True, the request is somewhat early, pre-tax refund season. I think the trustee simply saw the large refund in 2011 and figured that half of that amount is worth while (about $1,500) so what the heck.

[pamkev]

ditto that!

I second the ditto

[basketsbears]

Thanks for your advice. I was just blindsided by this. Actually, since I am barely working now (keep getting cancelled at work & school) I doubt we will have the refund we have had in past. But, they will get what they get I guess. As far as pay that was due, etc, do they just keep that out of next year's tax refund too?

Also, I am assuming that we can still be discharged this month - the earliest date is Oct. 15. So, if it is still open, what all does that mean??? Are there things we can/cannot do?

Thanks!

Lynn

btbeme

True, the request is somewhat early, pre tax refund season. I think the trustee simply saw the large refund in 2011 and figured that half of that amount is worth while (about $1,500) so what the heck.

[basketsbears]

Thanks again everyone for holding my hand through all of this.

[HHM]

Thanks for your advice. I was just blindsided by this. Actually, since I am barely working now (keep getting cancelled at work & school) I doubt we will have the refund we have had in past. But, they will get what they get I guess. As far as pay that was due, etc, do they just keep that out of next year's tax refund too?

Also, I am assuming that we can still be discharged this month - the earliest date is Oct. 15. So, if it is still open, what all does that mean??? Are there things we can/cannot do?

Thanks!

Lynn

Most likely, you will need to write a check to the trustee for the wages due and the money in the bank account. When you will have to pay this amount is mostly up to the trustee. You will probably receive a letter from the trustee shortly demanding you pay the money. However, the trustee may just wait to get everything all at once at tax time. But to answer your question, no, the trustee will not take the other money from the refund, you will need to pay it.

[basketsbears]

This is what my attorney emailed me today. I do feel better between everyone's support here and my attorney. Although, she is probably not thrilled that we won't close until after first of year either - but for different reasons! ;)

Here is reply:

It means that the trustee wants to see your income tax return for 2012 to see if there is any money he might be entitled to that is not exempt. It does not delay your discharge. But if we don't get him your taxes next year then he could move the court to revoke your discharge after it comes through. So....bottom line is you need to get me your taxes when they get prepared next year. This is very routine.

[Tater]

We filed at the end of late May and we were told there was a slight chance we would have to turn over part of next year's refund. At our 341 meeting, it was never mentioned in our case. There were people there that were told they would have to turn over a portion of their next return because of the amounts they received. I think it's worth it to get out of that debt and on with your life! It will work out!