Chapter 13 & Refund
Well, this is very interesting, that some of you get to keep your income tax refund. Our confirmation order, just received, said we were to pay our monthly payment plus any income tax refunds received during the life of the plan. We then received a letter from the trustee, asking for a copy each year of our return, and for any refund money that we receive to be immediately sent to him in certified funds or money order. Mind you, we would definitely have qualified for a 7, but we owed IRS penalties from 2002 that will be considered unsecured in a chapter 13. We only make my husband's social security disability check and my TINY salary.
So, I just efiled and sent him a copy of the return and the acceptance email. The second I receive the $112 refund, I will have to send it to him. (I'm going to increase my number of exemptions on my W-4.) These funds, he explains, will be given to unsecured creditors, not applied to the plan to shorten it or paid to secured creditors. How do you like that? It may go to the scummy debt-buyers.
Our lawyer said we were not supposed to turn over IRS refunds, and apparently that was wrong. I am thinking that maybe this upcoming economic stimulus plan, under which we are to be paid $300 or $600 per person, has caused this. Because it is paid through the IRS as a refund, the trustees have jumped on the opportunity to get this money. Ours would have been $600, because with all our medical expenses and LOW pay, we don't end up paying income taxes. We could have used that $600, since we have a major plumbing problem, need new tires, and all kinds of things. This does not bode well for the future, to me. Great - take away all incentive to get a better job, receive pay raises, or any way to save and pay off your plan at 36 months or take care of emergencies.
By the way, I wrote our senators and representative about this. I said that the criticism of the stimulus plan was that people paid debt and didn't spend it to boost the economy. I asked if they had done any studies to see what percentage of the people they are sending it out to are in IRS installment plans or in Chapter 13 bankruptcy. In one case, the IRS gets it immediately back, and in another, unscrupulus lenders who have quadrupled people's debts rather than working with them get it. There are millions of us out here with one situation or another who will have their checks confiscated and never receive them. Last time they did this, we were in an installment plan. We got a letter from the IRS that said it was applied to that. The government is cutting off its nose to spite its face, if the intention is that people go buy something. While someone might well want to put it on their installment plan, they might also need a root canal desperately!
What's funny is that we attended our debtor education class (that is due before discharge - 4 years from now) on the day of the 341 meeting. He talked about saving, getting second jobs, etc. Why? Work double time so that it can be confiscated? In our plan, apparently, any single dime over what we put down as our income, for 4 years, goes to him. Of course, there is not any consideration of the fact that gas may be $5 a gallon a couple of years from now, or the price of groceries may double again.
I guess I'm just a little miffed that we are just poor people, living in a house with no equity, with one OLD car, yet someone with a huge amount of equity in their home (can keep, in TX) might not be having every nickel examined and taken.
Well, this is very interesting, that some of you get to keep your income tax refund. Our confirmation order, just received, said we were to pay our monthly payment plus any income tax refunds received during the life of the plan. We then received a letter from the trustee, asking for a copy each year of our return, and for any refund money that we receive to be immediately sent to him in certified funds or money order. Mind you, we would definitely have qualified for a 7, but we owed IRS penalties from 2002 that will be considered unsecured in a chapter 13. We only make my husband's social security disability check and my TINY salary.
So, I just efiled and sent him a copy of the return and the acceptance email. The second I receive the $112 refund, I will have to send it to him. (I'm going to increase my number of exemptions on my W-4.) These funds, he explains, will be given to unsecured creditors, not applied to the plan to shorten it or paid to secured creditors. How do you like that? It may go to the scummy debt-buyers.
Our lawyer said we were not supposed to turn over IRS refunds, and apparently that was wrong. I am thinking that maybe this upcoming economic stimulus plan, under which we are to be paid $300 or $600 per person, has caused this. Because it is paid through the IRS as a refund, the trustees have jumped on the opportunity to get this money. Ours would have been $600, because with all our medical expenses and LOW pay, we don't end up paying income taxes. We could have used that $600, since we have a major plumbing problem, need new tires, and all kinds of things. This does not bode well for the future, to me. Great - take away all incentive to get a better job, receive pay raises, or any way to save and pay off your plan at 36 months or take care of emergencies. By the way, I wrote our senators and representative about this. I said that the criticism of the stimulus plan was that people paid debt and didn't spend it to boost the economy. I asked if they had done any studies to see what percentage of the people they are sending it out to are in IRS installment plans or in Chapter 13 bankruptcy. In one case, the IRS gets it immediately back, and in another, unscrupulus lenders who have quadrupled people's debts rather than working with them get it. There are millions of us out here with one situation or another who will have their checks confiscated and never receive them. Last time they did this, we were in an installment plan. We got a letter from the IRS that said it was applied to that. The government is cutting off its nose to spite its face, if the intention is that people go buy something. While someone might well want to put it on their installment plan, they might also need a root canal desperately!
What's funny is that we attended our debtor education class (that is due before discharge - 4 years from now) on the day of the 341 meeting. He talked about saving, getting second jobs, etc. Why? Work double time so that it can be confiscated? In our plan, apparently, any single dime over what we put down as our income, for 4 years, goes to him. Of course, there is not any consideration of the fact that gas may be $5 a gallon a couple of years from now, or the price of groceries may double again.
I guess I'm just a little miffed that we are just poor people, living in a house with no equity, with one OLD car, yet someone with a huge amount of equity in their home (can keep, in TX) might not be having every nickel examined and taken.
We were told we could keep ours to and paid our real estate taxes with them.
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