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
>
>
>
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image003.jpg@01CC076B.B14D73C0]
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>
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>
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ngebelt@goodbye2debt.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
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