HELP! Trustee demands that I pay to buy back assets or else!

[JackBondLove]

I've got a week to go to the discharge, and I get a letter from the panel trustee. I have not been able to contact my attorney about how to proceed. Of course, I would like to get an idea of how I should proceed with proceeding with my attorney ...

As a result of your filing bankruptcy, you must meet the following requirements before your bankruptcy case will be closed. The "Discharge of Debtors" you will or have received in the mail DOES NOT complete your case. You must consult with YOUR ATTORNEY, not MY OFFICE, if you are unsure of how to proceed or need further legal advice. If your attorney fails or refuses to assist you, he or she may be ordered to appear before the Bankruptcy Judge.

Requirements for the completion of your bankruptcy case are as follows:

1. TO KEEP YOUR PROPERTY:

If you wish to keep your property highlighted on Exhibit "A" (copy attached), you must purchase it from the bankruptcy estate (through me, your Trustee) by order of the court. As your trustee, I will submit the necessary Motion for Sale of Property of the Estate. Review thie exhibit CAREFULLY, with your attorney if necessary. DO NOT phone my office in need of an explanation of either the sale price or property. If you have ANY questions, call your attorney.

You MUST sign the "Acceptance of Offer Subject to Court Approval of a Sale" and return it to my office with Exhibit "A" attached. I will issue a Bill of Sale immediately after the Judge signs the order approving the sale, but ONLY IF you have paid the sale price by check or money order IN FULL! You may not sell, donate, transfer, encumber or otherwise dispose of any property until you have paid in full, a Court Order has issued authorizing the sale, and the trustee has issued a Bill of Sale to you.

TOTAL SALES PRICE REQUIRED: $X + Amount in Section 2

Make a check or money order payable to *** PANEL TRUSTEE ***

NOTE: Partial payments will not be accepted. DO NOT phone this office or have your attorney contact this office trying to make other arrangements. Payment will only be accepted in full!!

If full payment has not been received by the trustee within 30 days of hte date of thisletter, you will be required to surrender all property listed on Exhibit "A" that is highlighted and has a value assigned to it in Column 3.

2. OTHER MONEY YOU OWE IN ADDITION TO THE SALE PRICE REQUIRED IN SECTION 1

TOTAL $Y

3. IF YOU DO NOT WANT TO KEEP THE PROPERTY

If you DO NOT wish to keep the property listed in Exhibit "A", you MUST surrender all of the property immediately. You may not pick and choose items. You must purchase all of the property or surrender all of the property. If you decide you do not want the property, contact MY OFFICE in writing (not your attorney's office) to make arrangements. Please provide the following information:

A. Your Name and Case Number
B. A List of Property to be Surrendered
C. Pictures of the Property to be Surrendered

Then there is Exhibit A, which is:

Form 1
Individual Estate Property Record and Report
Asset Cases

Then there is a listing of the non-exempt assets. In column 6, "Asset Fully Administered (FA)/Gross Value of Remaining Assets", the is the total amount of $X, which is composed of $A in general stuff and $B in excess equity in the house (exactly the difference in the sales price I had recently paid and the homestead exemption.)

***********************************

OK, so what does this mean? Sounds like a pretty stern "you pay this or else" letter. Or is this just the standard opening salvo in negotiations? I can come up with the cash by taking a premature distribution from my retirement account, but of course, I would rather not, or at least with a lower amount.

The trustee also seemed to demand the full equity amount in the home. Shouldn't he have at least come up with some smaller figure that would more closely align with the net amount that could be garnered by selling quickly via a realtor?

Also, there did not seem to be any mention of the ongoing lawsuit I have against the federal government. Perhaps what the trustee is looking for is for me to sign over that in its entirety in lieu of the amount stated in this letter?

How should I approach this when I get in touch with my attorney?

[SMinGA]

No clue on the lawsuit - but if you have value over the exemption amounts, then I think its fairly standard to either pay trustee the value OR surrender the property. Some things, like being able to pay over X months would depend on the trustee and/or district.

I don't mean to be harsh, but by now you should have known you were an asset case & were over the exemptions? You don't get to claim bankruptcy protection AND keep non-exempt assets for free.

[backtoschool]

This is just a boilerplate trustee document that everyone in an asset case that has physical assets (as opposed to a tax return or something like that...) gets from their trustee. Your attorney can negotiate on your behalf. This letter represents the first step in a negotiation. The valuation of the assets can also be contested by your lawyer, etc.

The table of assets that the trustee is not releasing or exempting should list a "place-marker" amount for your lawsuit against the government if the trustee thinks there is money to be had there. Is the lawsuit listed on the list of assets the trustee wants money for? If you did not get a complete list with that letter, then go on pacer and the trustee's interim report will show what the trustee is considering doing re the lawsuit proceeds.

[justbroke]

Yep, you'll need to work through your attorney on what you need to do. If you're going to purchase the items, you, through your attorney can figure out what price. Some Trustees don't like negotiating and will tell you to just come to the Auction if you want to buy the stuff back. They don't want to deal with haggling over price. (Seems some Florida Southern District trustees are like this.)

[JackBondLove]

I wouldn't mind paying the stated value for the stuff, just to make it easy. Or maybe just cut it in half, just for the hell of it.

However, for the home, I would like to at least say that presuming the home could be sold for the same price that I had purchased (it was purchased on the eve of BK, so the price is right), that there would be a realtor fee that would be accessed, which would knock off 6% of the net recoverable value of the home - and perhaps an extra amount to make up for the fact that the trustee would want to sell it quickly, and therefore take another 5% or so reduction in price below the true value to move it, etc.

Now, concerning the timing of the payments of the purchase, it seems from the letter that I heed to pay it in full by the date given (less than a month away!) I suppose that I could also get my attorney to negotiate some nice payment plan over a year or so?

[JackBondLove]

This is just a boilerplate trustee document that everyone in an asset case that has physical assets (as opposed to a tax return or something like that...) gets from their trustee. Your attorney can negotiate on your behalf. This letter represents the first step in a negotiation. The valuation of the assets can also be contested by your lawyer, etc.

Great, that is what I thought, irrespective of the stern language in the letter!

The table of assets that the trustee is not releasing or exempting should list a "place-marker" amount for your lawsuit against the government if the trustee thinks there is money to be had there. Is the lawsuit listed on the list of assets the trustee wants money for? If you did not get a complete list with that letter, then go on pacer and the trustee's interim report will show what the trustee is considering doing re the lawsuit proceeds.

No, I got the complete list. It seems to be taken verbatim from the filing schedules. Some of the stuff would really be worthless at a BK auction in the Deep South (fitted alpine ski boots? That would be hard to auction in Colorado!) A lot of the stuff is bulky and would cost a lot just for someone to move them and store them for auction. That's why I think a standard 50% should be met with little resistance.

The lawsuit is *not* listed on the Schedule.

[JackBondLove]

I don't mean to be harsh, but by now you should have known you were an asset case & were over the exemptions? You don't get to claim bankruptcy protection AND keep non-exempt assets for free.

I originally got a letter saying I was no asset. This was before the 341 meeting. The only changes of note was that I mentioned the lawsuit (that was not mentioned at all in this letter), and also mentioned (with the HUD closing statement) the nominal price of my house rather than the de facto. The house was nominally bought for $Z, but since the contract stipulated that the seller would pay $1K in closing costs, I interpreted and used on the filing schedule the de facto price as $Z - $1K. The de facto price was still in excess of the exemption by $4K. How can $1K difference in price all of a sudden make me an asset case?