Tax Return - trustee is hard core! - wanted to share

[JessMN]

My federal tax return is $691 (purposely not a lot - why should I give the government a free loan? But that's not the point here). I filed near the end of May last year. I did not exempt any portion of this year's return assuming that the trustee wouldn't want it and/or wouldn't ask for it. And I didn't have any exemptions left anyway lol.

Well my attorney is saying that the trustee will want $290+ that would technically be property of the bk estate. now I am totally fine with that - he can have the piddly $290 in exchange for my discharge, I just wonder why its even worth it to him?!?! Whats he going to do, give all my creditors 50 cents? LMAO

My trustee is the trustee who presided over the Denny Hecker case (big MN thing, look it up if you care, but basically he owned a ton of car dealerships and stole money), my attorney say that since doing the Hecker case, my trustee thinks everyone has hidden money (which would account for why he is bothering going after the $600 my ex owes me that I couldn't exempt, another 75 cents per creditor!!)

Anyway, I just wanted to share. Whatever you do, DO NOT assume that your tax return is safe if you file earlier in the year! (again, I'm finding this funny...I don't want anyone to think I'm complaining about $290!)

[justbroke]

Why $290? Why not. With the majority of cases (90%+) rendering absolutely nothing for Trustees and (unsecured) creditors, even $290 is okay. The Trustee makes only about $60 per case unless they find some assets to administer. If they let 1,000 debtors go with $290, that's $290K. You have to think of this as a "volume" liquidation business; which is what this is.

Remember, the Trustees work to liquidate the estate to the benefit of the creditors; not the debtor! Too often we forget that simple fact and the fact that the Trustees are actually entrusted to look for money and to dig as deep as necessary to uncover money.

[JessMN]

that is a good point justbroke - collectively all the "piddly" returns DO add up!

[justbroke]

I believe that Des wrote that Trustees may get as many as 1,000 to 1,500 cases a year. You would think the $60 was worth it, but the Trustees do have a staff and actually do need to review the paperwork and perform asset searches. The $60 barely covers their costs in most cases. Finding $200 here and there could be the difference between being a profitable venture and withdrawing from the pool of Panel Trustees.

[kornellred]

Chapter 7 trustees generally perform their services as a sideline - the last thing anyone needs to fret about is the financial well-being of a trustee. Most of them are attorneys who make a respectable living outside of their duties as trustee. Chapter 13 trustees have far, far more work to do, and they are limited by law to earning not more than $175,000 (give or take a few hundred) per year. I was told that was because, otherwise, their earning potential could surpass that of the BK Court judges. How frightful that would be!

[Flamingo]

My federal tax return is $691 (purposely not a lot - why should I give the government a free loan? But that's not the point here). I filed near the end of May last year. I did not exempt any portion of this year's return assuming that the trustee wouldn't want it and/or wouldn't ask for it. And I didn't have any exemptions left anyway lol.

Well my attorney is saying that the trustee will want $290+ that would technically be property of the bk estate. now I am totally fine with that - he can have the piddly $290 in exchange for my discharge, I just wonder why its even worth it to him?!?! Whats he going to do, give all my creditors 50 cents? LMAO

My trustee is the trustee who presided over the Denny Hecker case (big MN thing, look it up if you care, but basically he owned a ton of car dealerships and stole money), my attorney say that since doing the Hecker case, my trustee thinks everyone has hidden money (which would account for why he is bothering going after the $600 my ex owes me that I couldn't exempt, another 75 cents per creditor!!)

Anyway, I just wanted to share. Whatever you do, DO NOT assume that your tax return is safe if you file earlier in the year! (again, I'm finding this funny...I don't want anyone to think I'm complaining about $290!)

As our attorney advised us when we filed, any funds you receive during your Plan years over and above your filing status on the day you filed your Chapter 13 are funds that can be used to pay back creditors as your disposable income is increased. Be thankful the entire amount was not taken. My father-in-law passed away smack dab in the middle of our Plan and 1/2 of my hubby's inheritance (thankfully it was not that large after expenses, etc. were paid) was taken by the trustee which increased the percentage of our Plan. Everyone needs to realize that one's financial house is not under their control during the Plan years; it's under the control of their Trustee.

[JessMN]

As our attorney advised us when we filed, any funds you receive during your Plan years over and above your filing status on the day you filed your Chapter 13 are funds that can be used to pay back creditors as your disposable income is increased. Be thankful the entire amount was not taken. My father-in-law passed away smack dab in the middle of our Plan and 1/2 of my hubby's inheritance (thankfully it was not that large after expenses, etc. were paid) was taken by the trustee which increased the percentage of our Plan. Everyone needs to realize that one's financial house is not under their control during the Plan years; it's under the control of their Trustee.

I filed 7 not 13 so they only had rights to around 40% of my return for 2011, which is what he wants - and I am totally fine with that! Glad I didn't have to file 13, I'd hate to have the trustee control my funds for 5 years.