Ch.13-tax refund-to Trustee (old law)

[dweezil]

Greetings! I have a question...My new atty. is telling me that if I am paying 100% to unsecured creditors I don't have to send my 2006 tax refund to the trustee, just my tax return information.

I thought that any refund due had to be turned into the trustee? The atty. is saying something about the BACPA law? I don't understand? I got this letter from the Trustee stating that if I failed to turn in my Tax return's and refund's by April 16 - my Ch. 13 would be dismissed. Last year I received the same letter.

Fact point -Last year I sent my return's to the Trustee cert. mail (I ended up owing on all 3) so no refunds due - and they overlooked something -filed a Motion to Dismiss (error on their end) had to w/draw it.

So, you can all see my hesitancy here!

My refund from the Federal is around $750, and I owe on the State and local.

If in fact, I can keep the Federal that is great - I can get a new washer that I desperately need - but if not - that money needs to go the the Trustee, which I believe it does.

Anyone have any comments on this - or even been in this situation. I am waiting to hear back from my atty. If my atty. say's I keep the refund and turn in my tax information I know I will - but I think I need to get in writing from the Atty. that I can in fact, keep the refund.

Thanks for any input!

[SinkingFast]

Did you move, change of Trustee, or is this the same Trustee you've had all along??

Personally, based on the Letter you got from the Trustee,.......... I'd just send copies of your Returns and the check to the Trustee. If the Trustee decides not to keep the refund, the Trustee will return the Check to you. An IRS refund check is good for a long while so it's not like it will expire.

It's much easier to send the check to the Trustee and possibly get it back than cash the check, spend the money, and have to cough up the funds later.

[helpless]

What state are you in? I filed old law and do not have to submit taxes or refunds. They are mine to keep. Too bad I owe the state. Was told by the trustee at info class that as long as payments are on time, there is nothing to worry about.

[jenrw74]

I would go ahead and send in the requested tax returns and refund if that is what they are asking you to do. You don't want to be in any trouble with the trustee. Unless your attorney says otherwise.

---HOWEVER---

Make sure you let your attorney know that you are in need of a new washing machine because they can file a motion with the court for you to keep your refund to buy a necessity. If approved, the trustee would send your refund back to you or if he's already cashed it, issue you a new check. I have had to do this for car repairs.

[dweezil]

FollowUp,

Thank's for the feedback!
Nope, I didn't move or anything, there was just confusion w/the new atty and paperwork, I guess....

So, this is what I found out after my atty's staff called me - I am not paying 100% unsecured back to my creditor's ~ I am paying a fixed set amount to the creditor's, after my secured creditor's are payed first. Therefore, my refunds/returns go directly to the Trustee.

So, the check is in the mail tomorrow!

On that note - When I had mentioned the washer/dryer I need - I mentioned it to my Atty/staff and they stated they could file a motion w/the Trustee's office to see if they see what they could do about me keeping the the refund to get a new washer - (since I was paying more money out of pocket running to the laundry mat weekly, cost, etc.) - But, it would cost me more money w/atty's fees/paralegal fee's in the end (charged to the case).

I said I would pass on that. After it all being said and done,the cost would probably be a pretty penny just to have the Motion filed to get the approval to keep the money for a new washer, I am assuming.

JENRW74 - did it cost you $$ to have a motion filed to keep your refund to have the money to repair your car? Or, what was the procedure handled on this?

Thanks for the input on the Tax return/W2, everyone!

[jenrw74]

I don't believe I was charged for it. The only attorney fees listed in my plan are the original fees. I personally think something like this should just be included in the original attorney fees since a ch 13 usually entails these sorts of additional filings. 3-5 yrs is a long time -- an unexpected expense has to come up at some point! Maybe it just depends on your attorney whether you have to pay additional money.

I've always been allowed to keep my tax refunds but when I totalled my van I had to file a motion to keep the insurance proceeds because it went to the trustee. I was allowed. There were no new charges added.

Hope this helps!

[Lesa13]

This is interesting to me - I am paying back at 100% (almost done in fact) and have to turn in any tax refund. Luckily for me, I've owed every year so far...but I get a letter every year telling me to make sure to get a real check (not direct deposit) and sign over to the trustee both on state and federal tax returns - no matter HOW LITTLE the amount.

[lrprn]

There's tremendous variability between how Ch 13 tax refunds are handled across the country, even between Ch 13 trustees in the same district. It's just luck of the draw whether you get a trustee that doesn't care about taking your tax refund, one that wants some of it, or one that wants all of it, even if it's a dollar. Very frustrating to see these big differences that have such an impact on filers when the law is a national one with hopefully some consistency in how it's administered.