Selling stock while in chapter 13

[newbie050104]

I am currently in a chapter 13. When I filed I had restricted stock from my employer that had not yet vested. It was listed in my "exempt property". I recently sold the shares that vested to help us get through a tight stretch.

I know I probably should have consulted my lawyer first. Can I get in trouble for this?

[HHM]

How much money are we talking about?

Also, were the assets truly exempt (i.e. what exemption did you use), or were they simply listed at zero value because they were restricted at the time and could not be liquidated?

[newbie050104]

$2800

Listed as $0 value with vesting dates.

[HHM]

Ok, so the stock was not "exempt".

There are 2 answers to this question.

1. By the letter of the law, what you did is problematic. That $2,800 is disposable income that could/should have been turned over to the trustee. In a chapter 13, you have a continuing duty to contribute ALL disposable income to your chapter 13 plan (this is why trustees can take income tax refunds for each year of the plan). You liquidated stock (an income event) and did not turn that money over. So yes, you could face a dismissal of your chapter 13 if the trustee finds out.

2. The second answer is whether the trustee will find our or even care. This situation really depends on how anal is the trustee. $2,800 is significant enough for many trustees, but we can't really say. At this point, I would not do anything and see if the trustee even picks up on it when you file your income tax.

[newbie050104]

Should I report this to my attorney or just lay low?

[ThreadsSnapping]

I would tell your attorney. If there are going to be any problems better to know about it now and try to find a way to deal with it than be blindsided later.

Or he may tell you it's not a big deal and not to worry.

TS

[newbie050104]

I did some digging on the company's restricted stock procedures.

On the vesting date, my company sold stock units to cover taxes using the fair market value of the stock on the vesting date and the taxes and income from the restricted stock are reported on my paystub and will be on my W2. Any gain/loss between the vesting date and date of my sale will be reported as capital gain or loss (very small loss).

So the large number from the restricted stock will be part of my regular income and I will report a small capital loss.

[Flamingo]

I did some digging on the company's restricted stock procedures.

On the vesting date, my company sold stock units to cover taxes using the fair market value of the stock on the vesting date and the taxes and income from the restricted stock are reported on my paystub and will be on my W2. Any gain/loss between the vesting date and date of my sale will be reported as capital gain or loss (very small loss).

So the large number from the restricted stock will be part of my regular income and I will report a small capital loss.

Advise your attorney what you did and what you did with the money and also advise him/her of the above. Remember, your financial estate is under the control of your Trustee during your Plan and your finances are really not under your control. The best thing to do during a Chapter 13 is not to play guessing games when it comes to any financial matter - always ask your attorney.