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Chapter 13 trustee requires tax refunds in a 100% plan
Dear Larry,
I appreciate the thought.
However, if I file a motion to modify the plan, I will either have to provide the service gratis, something I don't want to do, or charge the client for the work. I can, of course, get paid through the plan, which will require an increase in plan payments because my client has a lot of nonexempt real estate equity and available disposable income, or by charging him directly and filing a fee application to approve the payment. In either case, my client must pay more money to preserve his right to keep the tax refunds. This will be a very tough sell.
All the best,
Nick
Nicholas Gebelt
Nicholas Gebelt, Ph.D., J.D.
Attorney at Law
Certified Bankruptcy Law Specialist
[Description: Description: Description: cid:image003.jpg@01CC076B.B14D73C0]
Law Offices of Nicholas Gebelt
15150 Hornell Street
Whittier, CA 90604
Phone: 562.777.9159
FAX: 562.946.1365
Email: ngebelt@goodbye2debt.com; ngebelt@gebeltlaw.com
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File a motion to modify that term of the plan
Sent from my iPhone
On Mar 15, 2014, at 2:55 PM, "Nicholas Gebelt" wrote:
Dear Christine,
Thank you for your input.
The oddity here is that the debtors I, J difference disposable income (the value most commonly used in calculating plan payments) exceeds the plan payment size necessary for a 100% plan, meaning that the debtor does not have to devote 100% of his disposable income to plan payments; and the Trustee did not insist that he had to. But the Trustee now requires that he contribute his tax refunds to the plan because the refunds are part of projected disposable income within the meaning of 1325(b)(1)(B). To my obtuse mind the Trustees position is inconsistent.
All the best,
Nick
Nicholas Gebelt
Nicholas Gebelt, Ph.D., J.D.
Attorney at Law
Certified Bankruptcy Law Specialist
Law Offices of Nicholas Gebelt
15150 Hornell Street
Whittier, CA 90604
Phone: 562.777.9159
FAX: 562.946.1365
Email: ngebelt@goodbye2debt.com; ngebelt@gebeltlaw.com
Web: www.goodbye2debt.com
Blog: www.southerncaliforniabankruptcylawblog.com/
Important notice required by 11 U.S.C. 528: We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.
Confidentiality Note: This e-mail is intended only for the person or entity to which it is addressed and may contain information that is privileged, confidential, or otherwise protected from disclosure. Dissemination, distribution, or copying of this e-mail or the information herein by anyone other than the intended recipient, or an employee or agent responsible for delivering the message to the intended recipient, is prohibited. If you have received this e-mail in error, please notify us immediately at 562.777.9159 or e-mail info@gebeltlaw.com and destroy the original message and all copies.
Representation Note: If you have not signed a contract of representation, the Law Offices of Nicholas Gebelt do not represent you, and this email does not contain any legal advice for you.
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Dear Christine,
Thank you for your input.
The oddity here is that the debtor's I, J difference disposable income (the value most commonly used in calculating plan payments) exceeds the plan payment size necessary for a 100% plan, meaning that the debtor does not have to devote 100% of his disposable income to plan payments; and the Trustee did not insist that he had to. But the Trustee now requires that he contribute his tax refunds to the plan because the refunds are part of projected disposable income within the meaning of 1325(b)(1)(B). To my obtuse mind the Trustee's position is inconsistent.
All the best,
Nick
Nicholas Gebelt
Nicholas Gebelt, Ph.D., J.D.
Attorney at Law
Certified Bankruptcy Law Specialist
[Description: Description: Description: cid:image003.jpg@01CC076B.B14D73C0]
Law Offices of Nicholas Gebelt
15150 Hornell Street
Whittier, CA 90604
Phone: 562.777.9159
FAX: 562.946.1365
Email: ngebelt@goodbye2debt.com; ngebelt@gebeltlaw.com
Web: www.goodbye2debt.com
Blog: www.southerncaliforniabankruptcylawblog.com/
Important notice required by 11 U.S.C. 528: We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.
Confidentiality Note: This e-mail is intended only for the person or entity to which it is addressed and may contain information that is privileged, confidential, or otherwise protected from disclosure. Dissemination, distribution, or copying of this e-mail or the information herein by anyone other than the intended recipient, or an employee or agent responsible for delivering the message to the intended recipient, is prohibited. If you have received this e-mail in error, please notify us immediately at 562.777.9159 or e-mail info@gebeltlaw.com and destroy the original message and all copies.
Representation Note: If you have not signed a contract of representation, the Law Offices of Nicholas Gebelt do not represent you, and this email does not contain any legal advice for you.
IRS Circular 230 Disclosure: In order to comply with the requirements imposed by the Internal Revenue Service, we inform you that any U.S. tax advice contained in this communication (including any attachments) is not intended to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue code, or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein.
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Nick,
Same thing happened in one of my cases. Blindsided on Consent Calendar!
100% Plans! My order requires any refunds over $1,500.00 to be turned over!
My advice to the client is to adjust their withholdings so they DO NOT
receive a refund.
It makes no sense, but appears to be happening to a few of us. There was
another thread on this. Thanks for your deeper inquiry.
Christine
On Sat, Mar 15, 2014 at 12:28 AM, Nicholas Gebelt wrote:
>
>
> Dear Listmates,
>
>
>
> I have a Chapter 13 client whose 100% plan was just confirmed. It was on
> the consent calendar so I didn't attend the hearing. The confirmation
> order contained an interlineation requiring the debtor to send his tax
> refunds to the trustee for the pendency of the case, in spite of his being
> in a 100% plan.
>
>
>
> I called the Trustee's office and was told that my client's sending his
> refunds would simply shorten the duration of his plan. I said that my
> client wanted his refunds to help cover living expenses and preferred to be
> in the plan for the full 60 months. My interlocutor asked me to send an
> email to the Trustee explaining my position, which I did. The Trustee's
> staff attorney responded with the following:
>
>
>
> Pursuant to the Bankruptcy Code and case law, the debtor shall turn over [
> *sic*] the Trustee his tax refunds accrued on his post-petition [*sic*]
> earnings because the tax refunds accrued on a debtor's post-petition [
> *sic*] earnings constitute income. 11 U.S.C. 1322(a)(1); 1325(b)(1)(B); *In
> re Diaz*, 459 B.R. 86 (Bankr.C.D.CA. 2011).
>
>
>
> I responded with an email pointing out that: (1) *Diaz *is inapposite
> because it involved an 8% plan and my client has a 100% plan; (2)
> 1325(b)(1)(B) is only triggered if there is an objection to confirmation,
> which there was not, so that subsection is inapplicable to my client's
> case; and (3) my client's plan will pay 100% of his general unsecured debt,
> which is what is "necessary for the execution of the plan" per 1322(a)(1)
> -- any more gives the general unsecureds more than they are entitled to
> receive.
>
>
>
> In the past I have not had a Trustee require tax refunds in 100% plans
> (and I have filed a fair number of them), so this is new to me. I have
> spent some time looking for authority on this question, and haven't found
> anything on point. What am I missing?
>
>
>
> Thanks for any insight you can offer.
>
>
>
> All the best,
>
>
>
> Nick
>
>
>
> *Nicholas Gebelt*
>
>
>
> Nicholas Gebelt, Ph.D., J.D.
>
> Attorney at Law
>
> Certified Bankruptcy Law Specialist
>
>
>
> [image: Description: Description: Description:
> cid:image003.jpg@01CC076B.B14D73C0]
>
>
>
> Law Offices of Nicholas Gebelt
>
> 15150 Hornell Street
>
> Whittier, CA 90604
>
> Phone: 562.777.9159
>
> FAX: 562.946.1365
>
> Email: ngebelt@goodbye2debt.com; ngebelt@gebeltlaw.com
>
> Web: www.goodbye2debt.com
>
> Blog: www.southerncaliforniabankruptcylawblog.com/
>
>
>
> *Important notice required by 11 U.S.C. 528:* We are a debt relief
> agency. We help people file for bankruptcy relief under the Bankruptcy Code.
>
>
>
> *Confidentiality Note*: This e-mail is intended only for the person or
> entity to which it is addressed and may contain information that is
> privileged, confidential, or otherwise protected from disclosure.
> Dissemination, distribution, or copying of this e-mail or the information
> herein by anyone other than the intended recipient, or an employee or agent
> responsible for delivering the message to the intended recipient, is
> prohibited. If you have received this e-mail in error, please notify us
> immediately at 562.777.9159 or e-mail info@gebeltlaw.com and destroy the
> original message and all copies.
>
>
>
> *Representation Note*: If you have not signed a contract of
> representation, the Law Offices of Nicholas Gebelt do not represent you,
> and this email does not contain any legal advice for you.
>
>
>
> *IRS Circular 230 Disclosure: *In order to comply with the requirements
> imposed by the Internal Revenue Service, we inform you that any U.S. tax
> advice contained in this communication (including any attachments) is not
> intended to be used, and cannot be used, for the purpose of (i) avoiding
> penalties under the Internal Revenue code, or (ii) promoting, marketing, or
> recommending to another party any transaction or matter addressed herein.
>
>
>
Christine A. Wilton, Esq.
Law Office of Christine A. Wilton
5011 Argosy Avenue, Suite 3
Huntington Beach, CA 92649
Office: 714-533-9210
Fax: 714-489-8150
Email: attorneychristine@gmail.com
Web: www.attorneychristine.com
Blog: www.losangelesbankruptcylawmonitor.com
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Nick,Same thing happened in one of my cases. Blindsided on Consent Calendar! 100% Plans! My order requires any refunds over $1,500.00 to be turned over!My advice to the client is to adjust their withholdings so they DO NOT receive a refund.
It makes no sense, but appears to be happening to a few of us. There was another thread on this. Thanks for your deeper inquiry.Christine
On Sat, Mar 15, 2014 at 12:28 AM, Nicholas Gebelt <ngebelt@gebeltlaw.com> wrote:
Dear Listmates,
I have a Chapter 13 client whose 100% plan was just confirmed. It was on the consent calendar so I didn’t attend the hearing. The confirmation order contained
an interlineation requiring the debtor to send his tax refunds to the trustee for the pendency of the case, in spite of his being in a 100% plan.
I called the Trustee’s office and was told that my client’s sending his refunds would simply shorten the duration of his plan. I said that my client wanted
his refunds to help cover living expenses and preferred to be in the plan for the full 60 months. My interlocutor asked me to send an email to the Trustee explaining my position, which I did. The Trustee’s staff attorney responded with the following:
Pursuant to the Bankruptcy Code and case law, the debtor shall turn over [sic] the Trustee his tax refunds accrued on his post-petition [sic] earnings because the
tax refunds accrued on a debtor’s post-petition [sic] earnings constitute income. 11 U.S.C. 1322(a)(1); 1325(b)(1)(B);
In re Diaz, 459 B.R. 86 (Bankr.C.D.CA. 2011).
I responded with an email pointing out that: (1)
Diaz is inapposite because it involved an 8% plan and my client has a 100% plan; (2) 1325(b)(1)(B) is only triggered if there is an objection to confirmation, which there was not, so that subsection is inapplicable to my client’s case; and (3) my client’s
plan will pay 100% of his general unsecured debt, which is what is “necessary for the execution of the plan” per 1322(a)(1)
— any more gives the general unsecureds more than they are entitled to receive.
In the past I have not had a Trustee require tax refunds in 100% plans (and I have filed a fair number of them), so this is new to me. I have spent some time
looking for authority on this question, and haven’t found anything on point. What am I missing?
Thanks for any insight you can offer.
All the best,
Nick
Nicholas Gebelt
Nicholas Gebelt, Ph.D., J.D.
Attorney at Law
The post was migrated from Yahoo.
Dear Listmates,
I have a Chapter 13 client whose 100% plan was just confirmed. It was on the consent calendar so I didn't attend the hearing. The confirmation order contained an interlineation requiring the debtor to send his tax refunds to the trustee for the pendency of the case, in spite of his being in a 100% plan.
I called the Trustee's office and was told that my client's sending his refunds would simply shorten the duration of his plan. I said that my client wanted his refunds to help cover living expenses and preferred to be in the plan for the full 60 months. My interlocutor asked me to send an email to the Trustee explaining my position, which I did. The Trustee's staff attorney responded with the following:
Pursuant to the Bankruptcy Code and case law, the debtor shall turn over [sic] the Trustee his tax refunds accrued on his post-petition [sic] earnings because the tax refunds accrued on a debtor's post-petition [sic] earnings constitute income. 11 U.S.C. 1322(a)(1); 1325(b)(1)(B); In re Diaz, 459 B.R. 86 (Bankr.C.D.CA. 2011).
I responded with an email pointing out that: (1) Diaz is inapposite because it involved an 8% plan and my client has a 100% plan; (2) 1325(b)(1)(B) is only triggered if there is an objection to confirmation, which there was not, so that subsection is inapplicable to my client's case; and (3) my client's plan will pay 100% of his general unsecured debt, which is what is "necessary for the execution of the plan" per 1322(a)(1) - any more gives the general unsecureds more than they are entitled to receive.
In the past I have not had a Trustee require tax refunds in 100% plans (and I have filed a fair number of them), so this is new to me. I have spent some time looking for authority on this question, and haven't found anything on point. What am I missing?
Thanks for any insight you can offer.
All the best,
Nick
Nicholas Gebelt
Nicholas Gebelt, Ph.D., J.D.
Attorney at Law
Certified Bankruptcy Law Specialist
[Description: Description: Description: cid:image003.jpg@01CC076B.B14D73C0]
Law Offices of Nicholas Gebelt
15150 Hornell Street
Whittier, CA 90604
Phone: 562.777.9159
FAX: 562.946.1365
Email: ngebelt@goodbye2debt.com; ngebelt@gebeltlaw.com
Web: www.goodbye2debt.com
Blog: www.southerncaliforniabankruptcylawblog.com/
Important notice required by 11 U.S.C. 528: We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.
Confidentiality Note: This e-mail is intended only for the person or entity to which it is addressed and may contain information that is privileged, confidential, or otherwise protected from disclosure. Dissemination, distribution, or copying of this e-mail or the information herein by anyone other than the intended recipient, or an employee or agent responsible for delivering the message to the intended recipient, is prohibited. If you have received this e-mail in error, please notify us immediately at 562.777.9159 or e-mail info@gebeltlaw.com and destroy the original message and all copies.
Representation Note: If you have not signed a contract of representation, the Law Offices of Nicholas Gebelt do not represent you, and this email does not contain any legal advice for you.
IRS Circular 230 Disclosure: In order to comply with the requirements imposed by the Internal Revenue Service, we inform you that any U.S. tax advice contained in this communication (including any attachments) is not intended to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue code, or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein.
The post was migrated from Yahoo.