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Trustee Garnished my residuals...

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  • Trustee Garnished my residuals...

    I am currently going through a Chapter 7 in CA. I used to be in the entertainment industry and receive residual payments. Although, they get smaller and smaller each year. I just received a letter stating the trustee has ordered all the payroll companies to write the checks to her. How long can she collect my residuals? I am taxed and W-2'd at the end of the year on these residuals, how can she take them? I also rely on them to just barely make ends meet while going through this bankruptcy.
    I saw talk on here that sometimes you can negotiate with the trustee to buy back assets? Is this a possibility?

  • #2
    Unfortunately, unless you find an exemption to cover the residuals you will continue to lose the ones that relate to contracts entered into prior to filing bk. How long ago did you file the bk and do you have an attorney? You certainly can try to cut a deal with the Trustee but you should not do so on your own.

    Des.

    Comment


    • #3
      Thank you so much for replying. I am so upset and can't find answers anywhere. I do have an attorney, but he doesn't respond much to my questions. I have a second 341 meeting this coming Thursday. Is that where we would negotiate something? Can she really take my residuals forever or is there a time cap?
      Is that really something that happens, buying back assets? How would we even price something like residuals out. Is this a common thing in bankruptcy? Is it likely she will cut a deal?

      Comment


      • #4
        Read my post on the older thread. Your Trustee is not going to collect the residuals forever. She is going to sell the right to collect to the highest bidder. You really need to talk to your attny. If you cannot reach him/her by phone, set an appointment. You need to discuss your options which could include settling with the Trustee or converting to a Chapter 13.

        The issue of residuals is prevalent in the insurance industry. When such things are involved I rarely suggest doing a Chapter 7 unless the client does not care what happens to the asset. The royalties that were involved in the older thread were of a similar nature. Sounds like your "asset" also falls within this type of category.

        Des.

        Comment


        • #5
          Thank you so much for your response Des. I just don't really understand how they can sell them. I am W-2'd on them and taxes are taken from them just as income. It is treated no different than income/wages anywhere else other than this bankruptcy. And if she sells them, they take them forever? What happens to my pension? There is so much to this that doesn't make sense. I just wish I would of known.

          Also, now that she has taken them, we can no longer make ends meet. I had no idea this was going to happen, I did not agree to it. I just got a letter in the mail and it's done. Now I have no idea how we are going to buy groceries and feed my kids. I thought bankruptcy was supposed to be a reset, not make it worse than you were before.


          Comment


          • #6
            Please understand, this is all supposition as I do not know the true details. . .

            How receipt of the funds is treated for tax purposes is not the issue. From what I gather, you have pre-petition contract rights to certain future payments. Those contract rights/future payments are assets of your bk estate. The minute you filed the Chapter 7 your Trustee stepped into your shoes and took over the contract rights, hence the right to the payments. If you cannot find an exemption that protects those contract rights you do not get to take them back without settling with the Trustee.

            Now, your Trustee has no greater rights to the asset then you do. If the asset is not transferable/assignable by you then it is not transferable/assignable by the Trustee. The Trustee would simply have the right to take the benefits of the contract - the payment stream until that stream ends by the terms of the contract. Since a Chapter 7 Trustee cannot hold a case open indefinitely, if the contract rights cannot be sold to a third party, she may be willing to return them to you for an agreed amount.

            As it relates to you not knowing this was going to happen and any advice given to you by your attorney the first thing I would be looking at is whether or not you fully informed your attorney of this asset and how it was described on Schedule B. You needed to make sure your attorney understood what the asset was/is. Once you did that, if the attny did not advise you as to what may or may not happen, then, maybe you have a claim against the attny as maybe you should never have filed a Chapter 7. There is no way for me to know. You need to sit down with your attny to discuss your options.

            Des.

            Comment

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