Chapter 13 (2 1/2 years in) Tax refund

[unearthed]

We've been fortunate that the trustee has allowed us to keep our tax refund during the last two years, though it took jumping through hoops and waiting for over a month for them to get back to us (had to file a motion, etc). There's been a legitimate reason to do so both years (short falls, car repairs, dental work, etc). Thankfully this should be the last year we have to do this.

This year is no different. In fact, this year we're suffering from such a shortfall (since November, our paychecks have fallen off by nearly half due to hours being cut at the factory), that I'm feeling a little desperate. To be blunt, we'll be looking for help with groceries and utilities at the first of next week, for the first time in years.

Today we called the lawyer to let them know that we've received our state refund and expect our federal any time. My husband was about to explain to the secretary that we'd like to send a letter to the trustee requesting that we keep our state refund, when she cut him off. She explained that they're doing it differently this year and that we have to send them a copy of our tax refund, which they will send to the trustee who then decide whether or not we get to keep it the refund.

Is this a change in law? Or is it local policy? Has anyone else been through this, this year? If so, what was your experience?

[LadyInTheRed]

I haven't been through this, but it sounds like a change in the trustee's procedure.

If your decrease in income is permanent, you may want to ask your attorney about modifying your plan or converting to a Chap 7.

[justbroke]

Is this a change in law? Or is it local policy? Has anyone else been through this, this year? If so, what was your experience?

The process varies by District and Trustee (if there is more than one Chapter 13 Trustee appointed). My District requires a copy of the return, and then the actual paper check if refund is issued. They also require a letter seeking to use the funds... much like you have done in the past.

Let me take notice of your earlier statement, though. If your income has actually decreased and this is likely to be permanent, you should be speaking with your attorney about (potentially) modifying your plan! A Chapter 13 Plan of Reorganization is not meant to be punitive.

[unearthed]

Thanks for the replies. Hopefully this is just the ebb and flow of production work so I won't seek to lower our payments (which are pretty low as it is) unless this continues for another couple of months. I have sent the lawyer an email requesting additional information. Supposedly we are only in this for three years and--according to our plan base--we're on track to be done next fall. I say supposedly because the secretary my husband spoke with today told him that we're only required to surrender our tax refund for the first three years and after that we don't have to anymore. "So you won't have to go through this again," she said reassuringly. I'm hoping she's simply confused (as I recall, she gave me a good scare last year).