Trustee now wants copy of 2007 taxes

[Pumpkin729]

Here's the story....tell me what you think?

I called my lawyer asking for a early pay off amount, two weeks later I get a letter from him with the amount listed. I called him and ask ok what do we do next he stated that you cut him a check. I was like ah ummmm, doesn't he want to know where the money came from, and I need a letter from the trustee to get a loan. Lawyer was like NO, you're don't need a letter from the trustee cause you're passed the 36
months. I said well my credit union said they need a letter from the trustee before I can get the loan, lawyer said to me no you don't they want the letter just to cover their butts. So, I said to my lawyer are you sure that once we paid the balance trustee is not going to take that money and tell me to continue to pay until I am at 100% (right now we are 69.6%), he said no, he them said that I will double check if thats what u want. I said ok. Lawyer said he will call me when he hears something, that was a week ago. Here's what I don't understand. I am old law filed in 2004. We ares allowed to keep our tax refunds. I was never told nor asked to send in copies of my tax returns for 2005-2006, now all of a sudden I get a letter from the lawyer telling me that I have to send the trustee a copy of our 2007 taxes by Apr 15th. WHY? And why not 2005-2006 also. I called my lawyer but he hasn't returned my call yet and I am friggin out here. Is this just a routine thing they do when you ask to pay off early? Any opinion?

[HHM]

Since you are old law, your lawyer is correct, you don't have to worry about getting your plan upped by the trustee, so basically, once you get the buyout amount, you do simply cut the check. I don't think the attorney should have been as flippant about the CU needing the letter from the Trustee, that is fairly standard practice for lenders. Question: where is the money coming from exactly, is this a home refi, or are you simply borrowing money to pay off the 13 (the later is not really a good idea).

The tax returns is probably just part of the trustees new policy. You have to send them if the trustee requests them.

[Pumpkin729]

The lawyer never asked where the money was coming. I mentioned the loan (second mortage) from the Credit Union and he said "Oh, I thought you had the money, hit the lottery or something". I asked my lawyer doesn't the trustee want to know where the money is coming from to pay off early and lawyer said no. I find that very strange, u? Sometimes, I really think the lawyers and the trustees are all working together. Why don't I need permission to get the loan from my trustee as my lawyer stated? And why is the trustee only asking to see 2007 tax return and not 2005-2006? I hate being on pins and needles.

[Pumpkin729]

Since you are old law, your lawyer is correct, you don't have to worry about getting your plan upped by the trustee, so basically, once you get the buyout amount, you do simply cut the check. I don't think the attorney should have been as flippant about the CU needing the letter from the Trustee, that is fairly standard practice for lenders. Question: where is the money coming from exactly, is this a home refi, or are you simply borrowing money to pay off the 13 (the later is not really a good idea).

The tax returns is probably just part of the trustees new policy. You have to send them if the trustee requests them.

HHM,

Should I just go an apply for the loan without the trustee's letter, since the lawyer said I don't need one? Man, am I so confused!

[Flamingo]

I am old law and a bit confused by your posting. After 36 months in your plan, you can buy out of your plan and not be required to pay 100% but at the percent you are currently paying (I believe you are paying at "69.6%"). In order to buy out of a plan under old law and I believe under the new law, your attorney needs to prove to the Trustee that you are able to buy out and how you are buying out (i.e., refinancing your house and have enough equity to do so). You would be instructed by the attorney as to what to do, what to provide (i.e., appraisal, acceptance by a lender for refinancing, copy of truth-in-lending statement). The trustee would then review the documents and both the trustee and attorney would file a Motion for you to be allowed to buy out of your Plan. You simply cannot obtain refinancing or a loan to buy out without that permission while in a Chapter 13.

How are you obtaining the money to buy out of your Chapter 13?

[HHM]

You are correct, since you are old law, you only pay off the "existing" balance of your chapter 13 plan; you DO NOT have to pay off all claims at 100%.

And no, the trustee is not going to care where you got the money to pay off the plan. I only asked to get a better sense of the situation.

The reason both of those statements are true is because you are beyond your 36 month mark. As for how to proceed, that really just depends on how things work in your area.

My practical question to you, is there another purpose for taking out the 2nd mortgage other than to pay off the plan, if so fine; but if not, DO NOT DO IT, just finish the plan.

[Pumpkin729]

You are correct, since you are old law, you only pay off the "existing" balance of your chapter 13 plan; you DO NOT have to pay off all claims at 100%.

And no, the trustee is not going to care where you got the money to pay off the plan. I only asked to get a better sense of the situation.

The reason both of those statements are true is because you are beyond your 36 month mark. As for how to proceed, that really just depends on how things work in your area.

My practical question to you, is there another purpose for taking out the 2nd mortgage other than to pay off the plan, if so fine; but if not, DO NOT DO IT, just finish the plan.

HHM....To answer your question about the loan, no we don't really need to take out the loan to pay off the BK unless the trustee takes the money we've saved. We have scrimped and saved every penny we could for the passed 42 months to pay off early. Such as we did without/cut down on things that were included in our plan like our recreation money, clothes, cigs(cut back on) we had a car loan (paid outside the plan) that finished 18 months into the plan. Hubby's pay increase/overtime ... yes, it is under the 10%. I have read on this forum somewhere that the debtor saved his recreation money, I believed it was 100.00 a month he saved and paid off early. That's where I got the idea from. We just don't want the trustee to take the money we've saved claiming it as it was disposable income and tell us to continue paying until we reach 100%.

Above Flamingo states....I have to get the loan approved by the trustee. See, this is why I am so confused. I wish this was all over with already.

[Pumpkin729]

HHM...please read above and can you tell why you say do not take the second mortgage out?

[HHM]

We just don't want the trustee to take the money we've saved claiming it as it was disposable income and tell us to continue paying until we reach 100%.

That won't happen. You are passed the 36 month mark, you are old law, all you have to do at this point is get the pay-off number from the trustee and cut him a check.

I just did not want to see you unnecessarily take on new debt (the 2nd mortgage) just to pay off your plan. Sorry if there was any confusion. If you borrowered money to pay off the plan, because you are still in the chapter 13, you would have to get approval from the trustee to take the loan. (even though the 2nd mortgage is to pay off the chap. 13 plan) (but that is not a big deal).

[Flamingo]

HHM....To answer your question about the loan, no we don't really need to take out the loan to pay off the BK unless the trustee takes the money we've saved. We have scrimped and saved every penny we could for the passed 42 months to pay off early. Such as we did without/cut down on things that were included in our plan like our recreation money, clothes, cigs(cut back on) we had a car loan (paid outside the plan) that finished 18 months into the plan. Hubby's pay increase/overtime ... yes, it is under the 10%. I have read on this forum somewhere that the debtor saved his recreation money, I believed it was 100.00 a month he saved and paid off early. That's where I got the idea from. We just don't want the trustee to take the money we've saved claiming it as it was disposable income and tell us to continue paying until we reach 100%.

Above Flamingo states....I have to get the loan approved by the trustee. See, this is why I am so confused. I wish this was all over with already.

When I responded to you, you mentioned you were going to take out a "loan" to pay off your Chapter 13. I responded that if you were going to refinance or take out a "loan" that there are certain steps that needed to be done by you, your attorney and trustee before that could occur. Since you saved the money and don't need a loan from what I now understand from your recent postings, whatever is done in your district under the old law as to handling that sort of payoff situation is what will occur. In any event, since you are represented by an attorney, your attorney should be handling all this for you and you should not have to contact the trustee directly. Most trustees when contacted directly by debtors that are represented by attorneys will contact you back and advise you to go through your attorney, if they contact you at all. Best of luck to you and I hope all works out fine.

[MajorMike]

What happens under the NEW LAW ( I'm sorry to cut in on your thread ) if you say hit the lottery and want to pay it off? ( or someone like a family member gives it to you )

[HHM]

What happens under the NEW LAW ( I'm sorry to cut in on your thread ) if you say hit the lottery and want to pay it off? ( or someone like a family member gives it to you )

In about another 6-8 months, we will find out.

As I understand it, if you are less than 36 months into your plan, are not in a 100% pay back plan, and you want to buy-out, you have to pay 100% of all claims, not just the balance owed on the plan.

It remains to be seen if you will be able to pay merely the "balance" of your chapter 13, under the new law, after you get past the 36 month mark and are not already a 100% plan (no one has been in a new law chap. 13 for 36 months yet).

[Flamingo]

Lottery winnings, large financial gifts or inheritances would increase your financial estate during your Chapter 13 and depending on the amount, result in a higher or 100% payoff to creditors but if someone hit Powerball for megamillions, I don't think they really would care! :-)

[Flamingo]

In about another 6-8 months, we will find out.

As I understand it, if you are less than 36 months into your plan, are not in a 100% pay back plan, and you want to buy-out, you have to pay 100% of all claims, not just the balance owed on the plan.

It remains to be seen if you will be able to pay merely the "balance" of your chapter 13, under the new law, after you get past the 36 month mark and are not already a 100% plan (no one has been in a new law chap. 13 for 36 months yet).

I heard through the legal office grapevine that that was eliminated under the new law but that is how rumors go - no one really knows until the cases start happening. I also heard a while ago that the new law required trustees to obtain tax returns every year from debtors during the Plan yet from what I see on here that does not occur everywhere, unless Trustees are still going by old law and doing it still as a state/district thing. But this is sidetracking this thread so I am cutting it here.

[MajorMike]

Our attorney doesn't ask for tax returns. We were told that by the trustee himself.