Refund from creditor/principal

[ez2bgramz]

Hello everyone, my first question since joining!.. We've been waiting to close and got a letter back in July stating it would be 30 to 45 days for the final audit.. well after checking the NDC I find that the trustee got back all the monies we paid in for Ca. state taxes! Plus a trustee reversal fee. Does anyone have any knowledge about this kind of thing? Why would the State of Ca. have to send back the money and what happens to the funds now?
Thank you in advance for any information you can provide!

[bkbiker]

Hi,

Welcome to our forum,

I don’t quite understand your question; can you give us some more information?

Take care,
bkbiker

[HHM]

I will take a stab at this one...If I had to guess, since you really are not supplying very much info...

I am assuming you are talking about taxes YOU paid to CA, most likely before you filed BK.

If I recall, State Taxes do not get the same priority as Federal Taxes, so the Trustee probably sued the State of CA in what is known as an "Avoidance Action" Basically, the money you paid to CA should have been property of your BK estate, and because State Taxes are treated like most other creditors, The State of CA should not have been treated more favorably than anyone else in your plan and should be paid through your chapter 13 plan.

As a result, the trustee sued, and got the money back. As for what will happen to the money...it will be distributed to your creditors according to your Chapter 13 plan.

[ez2bgramz]

Thank you for the fast replies! And I apologize for the lack of information... not sure exactly how to word my question..

The taxes were from 1992 (both fed and state) and were included in our plan. We filed chapter 13 back in July 2003 (old laws). We are or rather should be awaiting closing/discharge according to the letter we recieved this past July 22. Since recieving that notice, i've been checking the NDC website and everything shows paid. The Ca. State Income tax was paid in the plan and the last payment from the trustee was on 5/1/06... then this past Fri, i checked and NDC shows a refund from the State of Ca... the whole amount which was $4049.44... plus there was a fee reversal from the trustee in the amount of $400.09 which I assumed was 10% of that State refund... we did not pay state taxes before we filed, as i mentioned earlier, the taxes were from 1992.. back taxes and medical bills was our cause to file.. so, HMM would what you said still apply?? or is there another answer here?? Thank you again!!

[HHM]

You have me stumped on this one...so no, what I said earlier would not apply, except that, the refund, will probably get distributed to other creditors.

Why would the State refund the entire amount of the debt you owe them, unless there was some huge mistake?

[ez2bgramz]

Your guess is as good as mine HHM... I guess we'll find out in the near future! Thanks again, and thank you BK for the warm welcome!!!