Trustee Filed an Objection to Exemptions.......

[RBisDebtFree]

Our trustee just filed an objection to exemptions on all our cash, checking accounts and our car ($500 cash, $4500 in checking accounts that went to rent a new place, $4000 car max appraisal).

What does it mean now? Do we have to fight it now? Are we going to lose all of this? We spent all the money to rent a new place.

Please let me know your opinions, I am kinda of feeling frustrated about this, it's like money going down the sewer, I know I am getting discharged from all the other debts but it's not a cool thing to have to lose so much, it will put us back into debt but now before the trustee.

[StartingOver08]

What state are you located in? Was the bank balance higher than the allowed cash exemptions for your state on the date of filing?

[backtoschool]

The next step most likely will be a 2004 exam in the trustee's office where he will ask you in more detail about your finances.

It is not a court hearing, just an informal hearing in the trustee's office where he can go into more detail than he did at the 341.

In order to understand what the trustee is objecting to, we need to know what state you filed in, and what exemptions you claimed.

[RBisDebtFree]

I am in the Washington state and I exempted all of that. I think all of the was above the permissible deductions but my attorney said it's ok in our state as he had people exempt $13-14k in cash. Now I am thinking that I should have not believed it and have done something with the money but too late...

What is my legal exposure to all of this? My 341 Meeting "Date End" was on Oct-02 so today is the last business day he could object, I guess everything else in my assets is safe. Should I be concerned about this?

P.S. My attorney just called and said that he talked to the Trustee today during one of his 341 meetings. The trustee told him that he does that as a general practice and he just filed this a blanket objection to "kind of have a hand on something" -- I would say what I think about this but I will not today at 9:30am there was a hearing regarding my house, trustee found problems with mortgage documents and is now trying to knock off the lien, the bank objected and I guess that he (trustee) got upset and I have to suffer. Anyways, my attorney said that there's now no timelines for my assets and if I want to sell my car, I would now have to ask the trustee. Also, the trustee told my attorney that he is not planning to do any exams / hearings on those assets yet. Just wants to "keep a have on something".

That's as much info as I have. Thank you everyone for helping me whenever I feel "up in the air" and not knowing what to do or what will be next!

[whipster1]

That trustee sounds like a jerk. Good luck.

[justbroke]

That trustee sounds like a jerk. Good luck.

Not to me, they don't. The Debtor's attorney was just foolish, and it is the attorney that is a jerk.

Our trustee just filed an objection to exemptions on all our cash, checking accounts and our car ($500 cash, $4500 in checking accounts that went to rent a new place, $4000 car max appraisal).

Any attorney who has been doing Bankruptcies for more than... 6 months... would inform his client to never, ever have cash in the bank on the day your file, unless you're sure you can exempt it. Reads like your attorney believed it was exempt. (And reading further where you mention that perhaps you were pushing the exemption limits made this more risky, to me.) Looking at Washington State bankruptcy exemptions under Washington Revised Code RCW 6.15.010(3)(b) specifically states that...

(b) Other personal property, except personal earnings as provided under RCW 6.15.050(1), not to exceed two thousand dollars in value, of which not more than two hundred dollars in value may consist of cash, and of which not more than two hundred dollars in value may consist of bank accounts, savings and loan accounts, stocks, bonds, or other securities;

That's pretty clear to me that you can't exempt more than $200 in cash under RCW 6.15.010. Furthermore, just because you have it in there for a deposit, means absolutely nothing in the grand scheme of things. It's cash on hand. (Your attorney may have used the Federal Exemptions, and I don't know if he did, but there's some more wiggle room in the Federal Exemptions to exempt cash.)

I am in the Washington state and I exempted all of that. I think all of the was above the permissible deductions but my attorney said it's ok in our state as he had people exempt $13-14k in cash. Now I am thinking that I should have not believed it and have done something with the money but too late...

I neither practice law in Washington State nor am I an attorney. However, you are stating that your exemptions were above what was permissible under the Statute. That means it's subject to objection. In the end, perhaps your attorney knows how to work magic, but you just said it yourself... you believe that you technically exceeded the allowance.

What does it mean now? Do we have to fight it now? Are we going to lose all of this? We spent all the money to rent a new place.

You and your attorney will probably sit down and figure out how much to fight this. Everything you own as of when you file is property of the Bankruptcy Estate and the Trustee is in control of it all. The Objection to Exemptions, whether the Trustee is using it to "hold" onto something or not, means that the Trustee is prepared to go before the United States Bankruptcy Judge and tell the Judge that your exemptions should not be allowed, at all.

The Trustee makes money by finding money. I don't think this is some simple "I just object for the fun of it".

I also don't believe the Trustee is punishing you because the Trustee is trying to avoid the lien on your home that you're surrendering. The Trustee went after the home because it looks juicy. The Trustee is going after your over-inflated exemptions because they look juicy.

In the end, you may have to "buy" the equity of the car back from the Trustee. As for the cash, it's anyone's guess. Your attorney will more than likely work out something with the Trustee, but I wouldn't hold my breath over it.

It truly is unfortunate that you have to suffer due to some advice that was all well intentioned, but turned out to be flawed. I hope that you're able to retain some of that property (cash/car) and nevertheless come out of this experience with your "fresh start".

I hope your lawyer can work some magic again.

[RBisDebtFree]

Thanks a lot for the info justbroke!

I simply followed his advice and experience about exempting funds in cash / checking accounts. He said that he had clients exempt around $13-14k with no objections or questions. He said that he himself (my attorney is also trustee) never objects to cash or checking account exemptions.

Anyways, I feel like I didn't use my own brain again and there's a price to pay for that. Hopefully, I'll be spared but if not, I'll just have to pay it and get to the discharge.

I'll post with updates as I get further in this matter...

[justbroke]

I'll post with updates as I get further in this matter...

I'm looking forward to good news. I hope that it was just the Trustee's frustration with the house/mortgage/lien and not that the Trustee really wants your money.

[killinstinct]

I too filed in Washington State. We can also use Federal Exemptions. I surrendered a house, and my attorney advised because of that we had lots and lots of exemption room. Something's missing here...why didn't you use the federal exemptions if you're surrendering your house?

[RBisDebtFree]

Well, I am using federal exemptions and I tought becuase I didn't use the $20k federal homdestead exepmption that it made sense that I keep could $4500 in cash/checking accounts and the car with a little bit more of equity than allowed. I am sorry I hadn't make it clear.

Maybe the problem is that both of the cars are only in my name but it's a community property state, it belongs to my wife and myself as we bought way after we got married.

As far as I see it, "Objection to Exemptions" is really only an objection, it's not a claim or anything of such manner. I guess as soon as I get my discharge I will have more desire to fight this -- out of the $4500, $1200 was already written out for bills and we used $3200 to rent a new place, then there were all the expenses to move, clean the old place (trustee was getting the keys for that) and other things. Also, we are pregnant with the second child and there will be some expenses associated with that, at least, the insurance co-payments / deductibles can run up to $2000 (that's what happened to me with the first child).

What I am trying to say is that I will probably be able to fight back the cash/checking account balances, as for the car, I am fine if the trustee gets whatever is over the permissible exemption, I wanted to sell the car anyway, it is in a very poor condition so I am not even sure if he can sell at the exemption allowance.

What do you think guys / girls? I hope I make some sense in my post!

[RBisDebtFree]

[justbroke]

It's the Federal Statutes...

(5) The debtor's aggregate interest in any property, not to exceed in value $1,075 plus up to $10,125 of any unused amount of the exemption provided under paragraph (1) of this subsection.

Appears to be the general Federal Exemption. Did you exceed that amount on all your property or something? If you're below all the limits provided in 522, then I don't know the Trustee's beef, other than the amount of cash. Some States (like Washington under Washington's Exemption) limit how much cash you can have "on hand" but the Federal Exemptions don't limit the cash.

[killinstinct]

Doesn't make sense to me still, sounds like you should still have had plenty of room? Plus you get to double exemptions with your spouse...!?

[RBisDebtFree]

[RBisDebtFree]

Below is the text from the Objection to Exemptions notice:
REASONS FOR OBJECTIONS
The trustee is objecting to the debtors’ claimed exemption in order to preserve his rights to object when more information is known to the trustee about the debtors’ assets which are claimed to be exempt. Specifically, these objections are as follows:
1. To the extent that the debtors are attempting to claim an exemption in excess of the value permitted either by federal or state law, the trustee objects to the assertion of such an exemption;
2. To the extent that the debtors have claimed an ‘unknown’ value for any item, the trustee objects to the assertion of an exemption;
3. To the extent that the debtors are attempting to claim an exemption for property for which no exemption is permitted under federal or state law, the trustee objects to the assertion of such an exemption;
4. To the extent that the debtors do not describe an asset or other item of property for which an exemption is claimed with particularity, the trustee objects to the assertion of such an exemption;
5. To the extent that the actual value of an asset exceeds the valuation of the asset by the debtors, the trustee objects to the claim of any exemption of any proceeds realized by the estate in excess of the amount claimed and allowable under to applicable exemption statute;
6. To the extent that the debtors are claiming an exemption in a quantity of items which exceed the limit allowed under applicable law, the Trustee objects to the claim of exemption in an item over said limit;
7. To the extent that the debtors claim double the amount of any exemption for which only one exemption is permitted under applicable statute, the Trustee objects to the claim of exemption over the amount allowed for one such exemption;
8. To the extent the debtors failed to disclose any assets or concealed any property, the Trustee objects to any claims of exemption by debtors in such assets or property.


This all sounds pretty nasty, especially, number 8. Do you think this is addressing all of my assets or just the ones he listed? Should I now expect a knock on the door with trustee coming for a visit? If this helps you understand more of what it means, please let me know. I would love to be as much prepared as I only can. Thanks to everyone once again!