Trustee taking excess tax refund....sigh..........

[BrokeinMD]

Good news, BKLooker! Thank you for the update!

[chicagoannie]

Good update, BKL. I know what you mean about finally having some money. We've been destitute for so many months now...I can't wait to get my refund (still waiting on W2 from my former sucky employer) and have a bank account again...one that I do not have to worry is going to one day disappear due to a collection! I hope your house sale takes the mortgage company a LOOONNNG time.

[olivies]

BKL- curious...why not adjust your withholding so you don't get such a big refund each year and have the monthly cash instead? I think you lucked out with the trustee not pointing out that you needed to make withholding changes. Overwithholding was actually one of the things the UST tried to argue on us. We however aren't overwithholding, and told her we were accounting for changes in what we can take for child tax credits, etc. this year with our older two kids now aging out of that. We followed the IRS suggested withholding calculator.

[wickedlate]

I was getting 9K back this year and the trustee wants 3700 of it. /cry...

[BKlooker]

Hi Olives,

My BK wasn’t particularly planned that far in advance. If you want the total truth, I had no idea what bankruptcy was, other than it was this scary thing that large scale companies go through when they don’t have their money together (and that Kmart has gone through about 16 times).

The first time I even was posed the question/option was when I went to my lawyer’s office to discuss a short sale on my house. I knew I wasn’t going to be able to stay afloat with student loan payments, my house payments with a reset ARM in a year, a new car needed soon, and the skyrocketing credit card minimums thanks to the interest rates going way up with the recession. I first considered BK in the end of September. I filed the first week of December. It wasn’t going to be enough time to make any adjustments, and I didn’t want it to look like I was ‘skirting the law’ or trying to pull one over on the trustee.
The 6K refund had always worked well for me in the past. It allowed me to pay my parents in lump sum for my car insurance and cell phone (which are still in their names), plus pay them for my portion of the family trip we take every year, pay my yearly home warranty plan up front, and then leaving me with about 1-2grand left to get caught up on daily life things (vet care, replace some appliances, etc.) and maybe a nice dinner or two. Doing it this way meant I didn’t have to worry about stashing away savings all year long with the hopes I could amass enough to cover all that come the following year if I had to dip into it for medical/car expenses, etc.

I had a long history of the refund like this (for the past 3 years), so overwithholding was not an issue, in the sense of me trying to up it for just this one year. I had always just gone with the standard IRS exemptions and let the withholdings fall where they need to from there as far as what the feds take from my check.

I am planning on turning over the certified check to my lawyer in a day or two, who is then going to give it to the trustee. That should be the end of it, and it’s a small price to pay to be done with this whole mess soon. Only 2 weeks til discharge!