Question about wildcard in Ohio

[bk2009]

So this was the response from our lawyer today, when I asked him if there was case law on this:

I've told you already that this is very fact intensive and there is no case law directly on point. The law provides that the trustee is entitled to any non-exempt property that a debtor had on the day of filing. You guys had $3,000 or so in the bank on the day of filing. He is arguing that at least a portion of that money was un-exempt tax refund. Its as simple as that. We are arguing that after exemptions there is nothing there for him because you spent some of the $ on necessaries.

He is arguing that you spent the "exempt" $ on the necessaries and so there is non-exempt money left for him.

I think the court could go either way on this.

So, he wants like $1300 of the money. We don't have anything left. Like, nothing. I spent it on things like tuition that I wanted to pay prior to filing but to which our lawyer said wasn't necessary because it was all covered with our exemptions, and now we're getting screwed. And I still owe more for tuition too.

[LadyInTheRed]

So, did you list cash on the petition and show it as exempt? Then, did the trustee say it's not cash, it's a tax refund? Then, if it's a tax refund only one spouse's exemption applies? Just trying to undetstand. Knowing how the asset was listed on your petition and what exemption was used would help.

[bk2009]

It was listed as cash, tax return, exempted. Our EITC, child tax credit and DHs exemption (since the trustee said no to me), more than cover the $3k, but he's saying that DHs exempted cash paid for the lawyer (from prior to date of filing).

[justbroke]

Well, if the attorney is not going to fight with the Trustee, you may just be out of luck. The exemption would be on what cash you had the DAY that you filed, but I can see some weird scenario where it is claimed that the $3,000 of cash was from the refund and since it was the refund, only $E can be exempted. However, that still makes no sense at all and your attorney says that there is no case law on this.

I think I now understand your attorney's (and Trustee's) position. Since you are trying to exempt the money by using Tax Refund related exemptions, the Trustee is saying that those exemptions apply only against the original refund. IN other words, to use a "tax refund" exemption, you must apply it against the entire tax refund.

Is there no other way to exempt the $3,000?

[bk2009]

So, the exemptions are as follows:
EIC: $610
Child Tax: $1407
DHs wildcard: $1150
Cash on Hand: $425

Total exemptions = $3592. It should have had another $1150 on it for my exemption, but the trustee says that I can't use it because I didn't work, so it's not my refund (never mind that it comes addressed to both of our names).

So, if you go by date of filing, we had $3k on hand, it's a no brainer, we had enough exemptions. He's saying that we have to cover $4870 - our entire fed and state refund rec'd nearly a month before we filed and the roughly $1800 was used to catch up on utilities and to pay our attorney. The trustee is arguing that we could do that, but only out of our exempted portion. But everything I read says it's day of filing, not day of receipt of tax refund.

And I'm pissed at my attorney b/c I wanted to spend it all down -fixing my car, buying some clothes for the kids (this has totally screwed us this year b/c my kids have very limited summer clothes, mainly wearing what they did last year) and he assured us that we shouldn't and it would be looked at badly. And now the trustee wants $1278, it's just garbage.

[justbroke]

I am mad as well. There is no way that I can see that a "tax refund" that was reduced to cash, and spent down before filing, could ever be subject to the Trustee's wrath. Your assets are as of the day of filing.

There is something wrong here.

[bk2009]

Yay! Good news finally today! The trustee finally agreed that we were right and he is closing the case now, no-asset! So relieved!

[justbroke]

Yay! Good news finally today! The trustee finally agreed that we were right and he is closing the case now, no-asset! So relieved!

I am relieved as well. My real relief is not that the Trustee finally agreed, it's that your attorney finally stood up to the Trustee! This was clearly, in my non-professional but educated view, that the Trustee did not have a valid claim that your exemption was invalid.

I hope that your attorney learned something from this!

[LadyInTheRed]

I'm very glad to hear that news!

I hope that your attorney learned something from this!

Me too!