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In the process of filing for chapter 13, But . . .

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    In the process of filing for chapter 13, But . . .

    Hello everyone, new to this forum. Today me and my wife met with our attorney to sign the paperwork for filing chapter 13. Little did we know that our tax returns were going to be turned over for payment to our creditors. :-0 After we left his office she was pretty upset and very confused. I currently owe a little less than $4,000 on my suv. My attorney thought it was safer to include it in the Chapter 13. My wife just had our second child (a baby girl) and she wanted to pay the suv off, sell it and use that money towards a more fuel efficient suv. I was trying to explain this to our attorney, but I'm not sure what happened. We did arrive 20 minutes late due to the baby being fussy, so it was a bit rushed. We had plans on using our tax returns to fix some things in the house and possibly use some of it to help purchase another SUV. How does the tax return process work with chapter 13? Does anybody have any input they can kindly share? Is there a possibility to keep our returns? I would hate for 5 years of returns to go out the window. Long story short to what got us into this mess, our home flooded back in Jan 18 and I had to stop working since I worked from home and had to supervise the repairs of our home which was a PITA. Lots of issues with insurance and contractor. Ended up spending a lot of our own money into the house and without my income, we were basically struggling to catch up on our credit cards which were being used to pay for materials and necessary things to finish the house up, since the insurance screwed us over. I could really use some input. Payment plan is set to around $400 a month for 5 years. I told our attorney to hold off filing until me and my wife talked it over. Any input will be greatly appreciated. Thanks guys.

    #2
    Welcome to the forum.

    The turnover of tax refunds and the submission of copies of tax returns depends upon local procedure. In some districts the refunds only have to be turned over if they are above a certain amount. In others all refunds must be given to the Trustee. It sounds like your district requires the turnover of the refunds received after the case is filed. So. . . if you can hold off filing until sometime after you receive, cash and spend the 2019 refunds 2019 will not be issues. You need to listen to your attny since he/she is best suited to knowing the procedures in your district.

    As to the vehicle, the attny may want that secured debt included in the bk because, if you do not have a car payment there will be less "allowed expenses" for means testing purposes and your "disposable income" may be higher. This is a technical issue which may also be district specific. Or, he/she simply thinks it's a bad idea to get rid of one vehicle and purchase another (either with cash or financing) on the eve of filing bk. You need to find out why he/she wants you to keep the vehicle.

    You and your wife need to be comfortable with your bankruptcy. If there are matters that need clarification or matters you do not understand, set another appointment with the attny. It is your bk therefore it is in your best interest to understand and be comfortable with every step of the process. You should be fully engaged with the attny at the meeting. The meeting should not be rushed therefore there should be no distractions that either delay your arrival or interrupt the meeting.

    Des.

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      #3
      You might even want to speak with another attorney. We had a horrible attorney at one point and switched to another.

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        #4
        Originally posted by karna68 View Post
        You might even want to speak with another attorney. We had a horrible attorney at one point and switched to another.
        I didn't know that was possible. Mine attorney isn't that bad, I just think I'm getting scammed out of our return. We did our taxes and I want to know how much they plan to keep.

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          #5
          So we filed our taxes and spoke to our attorney before and he said that our trustee does allow us to keep curtain credits. Now the questions would be are we allow to keep the child tax credit and earned income credit? Is there curtain laws that apply to us? If anyone can shine some light on this it would be greatly appreciated. This is what my attorney had to say: "Your trustee allows certain credits. When you file, send them over to us and we'll let you know how much you get to keep. If you have to spend some money say on a large repair, you'll need to send in documentation of how much it will cost you, then we'll have to ask the court for a petition and add it to the case. Your payment could possibly go up and you would have to make up for it in your payments. I know this is not the best answer you're looking for, but this is what's has to be done. " Is this BS or is this legit? I feel like we are getting the short end of the stick. In IL is it helps. Thanks guys.
          Last edited by johngotdoe; 02-15-2020, 04:46 PM.

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            #6
            The answer is very district and even trustee specific. Nobody is going to have the specific guidelines other than your lawyer. But it might help if I tell you what's the practice in my district so you don't feel raw about what your attorney is telling you.

            In my district, you will have to turn over refunds greater than $500 if you are not in a 100% plan. Although it is possible to file a motion to retain funds for necessities, the trustee treats these requests very seriously and will give you a really hard time if you try this every single year or for minor things like upgraded windows instead of an emergency like a leaking roof or dental work. In addition, most attorneys will charge you added fees for this service since they don't include it in your base chapter 13 fees. You may hear from other posters that you can do this every year for free with no hassle from the trustee, but that's not gonna happen in my district and the lawyer probably won't do it for free. You will have to provide estimates on what you're spending the money on and you will have to provide receipts to prove you spent it properly after the motion is approved. Your plan payment will go up because the lawyer will charge you for this motion and put the extra lawyer fees in your plan.

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