Advice Needed-Extra Cash At The 341 Mtg

[DJC]

We have not had our chapter 13 341 meeting date set yet, I expect that soon. As mentioned before, we had a chapter 7 denied for various reasons and have converted to a 13. There were some financial issues, such as paying off an existing 401k loan and refinancing of the house in order to get our DMI up to a point that we could begin a monthly payment of around $275.00. We also had some mandatory expenses such as a home insurance mandated roof and mandatory shrub removal. Our attorney said it was fine to take money out of my 401k ( I am over 60 and do this twice a year) and pay for the mandatory issues at hand. I did such operating off of some contractor proposals. Now that the work is completed and invoiced, the total dollar amount is around $2,000 less than what I initially thought it would be. I found a local roofer that was cheap, would do this work in winter and took cash. So here is the question, are we going to loose that cash that is sitting in the bank? Is there a reasonable amount a trustee may let us keep for future budget costs? Any suggestions on how to handle this situation would be appreciated. I think I did post a similar scenario before, but now we have exact figures. Thank you.

[dmc-2008]

I wouldn't gave any cash sitting in a bank account, I think they will take it.

[LadyInTheRed]

I wouldn't gave any cash sitting in a bank account, I think they will take it.

In a Chap 13, the trustee rarely takes assets. If, on the date of filing, there is non-exempt cash, then that creates a minimum that unsecured creditors must receive during the plan. But, this cash did not exist in it's current form on the date of filing. The question is whether at the time it was withdrawn from the 401k, it became income to which the trustee is entitled. I don't know the answer to that question. If it is income and the plan hasn't been confirmed, then you may be able to divide by 60 and add it to the plan payment.

[justbroke]

I have never read about a Chapter 13 where the Trustee asked for anything but the bank account balances at the time of filing. I find Chapter 13 Trustees less worried about account balances unless there were significant balances at the time of filing and the Trustee is trying to perform a "best interest of creditors" test. (This test is really to just determine the amount you would have had to pay if it were a Chapter 7 case. I guess it's really the Chapter 7 liquidation test, but I read about Trustees performing "best interest of creditors" test in Chapter 13s.)

[dmc-2008]

Oh thanks! :-)

[justbroke]

It's just that, usually, Chapter 13 Trustees are different. In fact, their powers are slightly different than the Chapter 7 Trustee. If there are questions and things look strange to the Trustee, expect them to look deeper into finances.

[sandlunatic]

We had 8,500 dollars in the bank at the time of filing, part tax return, part saving when no longer paying bills before starting the bk process and we were allowed to keep it all. Our attorney included in the paperwork.

[LadyInTheRed]

We had 8,500 dollars in the bank at the time of filing, part tax return, part saving when no longer paying bills before starting the bk process and we were allowed to keep it all. Our attorney included in the paperwork.

You probably used the system 2 wildcard exemption (over $2,300) to exempt the cash. That is a different issue than the OP who took a withdrawal from an exempt 401k AFTER filing and did not use it all for the necessary expense for which it was intended. The questions is whether the excess is disposable income. I think JB is right that the trustee is not likely to look at any account statement other than the date of filing statement unless he/she starts digging for some reason.

[DJC]

Thank you for all of the information. We received our 341 hearing date, it is February 19th. The trustee has requested (I'm sure there are additional folks) we attend a seminar she will put on that is about who she is, what to expect, how to manage our money in a 13 and a few other interesting topics. We are actually looking forward to the pre-meeting. The more I get to know my trustee, the more comfortable I will feel. I just need to know the rules.