How to Avoid Objections by the United States of America on Behalf of its Agency, the Internal Revenue Service
Both individual and corporate Chapter 11 Debtors are subject to objections by the United States of America on behalf of its agency, the Internal Revenue Service. Here are a few small tips to help prevent those objections:
It is likely that any auto-payment you have set up with a creditor will come to a screeching halt so that the creditor can't be accused of violating the automatic stay, which is an injunction to protect you and property of the bankruptcy estate. This means that you may lose online access to certain portals, like the ability to make payments online for your car loan or your home loan. This can often be remedied by providing letters from our office that authorize communication on the loans so that you can continue to receive statements or make payments online for your home or car loan. Other times, access won't be granted but you can still make payments by mail or by phone during your bankruptcy case.
Tax Refunds Adjusted and Made Uniform Across Central District of California with Chapter 13 Plan Form Effective December 1, 2017
Every Chapter 13 client is required to provide a copy of their tax returns to both counsel and the Chapter 13 Trustee to analyze any changes and to account for any post-petition tax refunds that the client received or will receive.
The rule prior to December 1, 2017 varied in different jurisdictions, with some allowing clients to keep no refund and others allowing up to $1,500.
The new rule, Effective as of December 1, 2017, is that clients will get to keep a net refund of up to $500 before having to turn additional refund amounts over to the Chapter 13 Trustee. The "net refund" means that if you have a $2,000 State Tax Refund, but you owe the Internal Revenue Service $1,500, you will have a net of $500 in which you will be able to keep the entire amount.
There are several jurisdictions within the Central District of California with one or more Chapter 13 Trustees in each location.
Los Angeles: There are two possible Trustees that will be assigned your case in the Los Angeles Division: Kathy A Dockery or Nancy Curry. Both of their websites are helpful in setting up auto payments and providing general information about your case.
Riverside: Rod Danielson is the standing Trustee in the Riverside Division. His website provides access to your case data, a link for TFSbillpay (which is an epay option), and other helpful forms and links.
Santa Ana: Amrane Cohen is the standing Trustee in the Santa Ana Division. His website provides links to access your case so that you can see when your plan payment posts and where funds are being disbursed. The website also provides a questionnaire to see prior to the meeting of creditors and a link to epay.
San Fernando Valley and Northern: The standing Trustee in these divisions is Elizabeth Rojas. Her website provides additional information on where to send payments and setting up an auto-pay option after your plan is confirmed.
Typical Questions Asked By The Trustee at the 341 Meeting of Creditors
1. State your name for the record. Is the address on the petition your current address?
2. Please provide your picture ID and Social Security number card for review.
a. If the documents are in agreement with the § 341(a) meeting notice, a suggested statement for the record is:
“I have viewed the original State of California drivers license (or other type of original photo ID) and original Social Security card (or other original document used for proof) and they match the name and Social Security number on the § 341(a) meeting notice.”
b. If the documents are not in agreement with the § 341(a) meeting notice, a suggested statement for the record is:
“I have viewed the original Social Security card (or other original document used for proof) and the number does not match the number on the § 341(a) meeting notice. I have instructed the debtor (or debtor’s counsel) to submit to the court an amended verified statement by [date], with notice of the correct number to all creditors, the United States Trustee, and the trustee; and to file with the court a redacted copy of the notice, showing only the last four digits of the Social Security number, and a certificate of service.”
c. When the documents do not match the petition, the trustee shall attempt to ascertain why and shall report the matter to the United States Trustee.
d. If the debtor did not bring proof of identity and Social Security number, the trustee shall determine why.
3. Did you sign the petition, schedules, statements, and related documents and is the signature your own? Did you read the petition, schedules, statements, and related documents before you signed them?
4. Are you personally familiar with the information contained in the petition, schedules, statements and related documents? To the best of your knowledge, is the information contained in the petition, schedules, statements, and related documents true and correct? Are there any errors or omissions to bring to my attention at this time?
5. Are all of your assets identified on the schedules? Have you listed all of your creditors on the schedules?
6. Have you previously filed bankruptcy? (If so, the trustee must obtain the case number and the discharge information to determine the debtor(s) discharge eligibility.)
7. What is the address of your current employer?
8. Is the copy of the tax return you provided a true copy of the most recent tax return you filed?
9. Do you have a domestic support obligation? To whom? Please provide the claimant’s address and telephone number, but do not state it on the record. Are you current on your post-petition domestic support obligations?
10. Have you filed all required tax returns for the past four years?
SAMPLE GENERAL QUESTIONS
(To be asked when deemed appropriate.)
1. Do you own or have any interest whatsoever in any real estate?
If owned: When did you purchase the property? How much did the property cost? What are the mortgages encumbering it? What do you estimate the present value of the property to be? Is that the whole value or your share? How did you arrive at that value? If renting: Have you ever owned the property in which you live and/or is its owner in any way related to you?
2. Have you made any transfers of any property or given any property away within the last one year period (or such longer period as applicable under state law)?
If yes: What did you transfer? To whom was it transferred? What did you receive in exchange? What did you do with the funds?
3. Does anyone hold property belonging to you?
If yes: Who holds the property and what is it? What is its value?
4. Do you have a claim against anyone or any business?
If there are large medical debts, are the medical bills from injury?
Are you the plaintiff in any lawsuit?
What is the status of each case and who is representing you?
5. Are you entitled to life insurance proceeds or an inheritance as a result of someone’s death?
If yes: Please explain the details.
If you become a beneficiary of anyone’s estate within six months of the date your bankruptcy petition was filed, the trustee must be advised within ten days through your counsel of the nature and extent of the property you will receive. FRBP 1007(h)
6. Does anyone owe you money?
If yes: Is the money collectible? Why haven’t you collected it? Who owes the money and where are they?
7. Have you made any large payments, over $600, to anyone in the past year?
8. Were federal income tax returns filed on a timely basis? When was the last return filed?
Do you have copies of the federal income tax returns? At the time of the filing of your petition, were you entitled to a tax refund from the federal or state government ?
If yes: Inquire as to amounts.
9. Do you have a bank account, either checking or savings?
If yes: In what banks and what were the balances as of the date you filed your petition?
10. When you filed your petition, did you have:
a. any cash on hand?
b. any U.S. savings bonds?
c. any other stocks or bonds?
d. any certificates of deposit?
e. a safe deposit box in your name or in anyone else's name?
11. Do you own an automobile?
If yes: What is the year, make, and value? Do you owe any money on it? Is it insured?
12. Are you the owner of any cash value life insurance policies?
If yes: State the name of the company, face amount of the policy, cash surrender value, if any, and the beneficiaries.
13. Do you have any winning lottery tickets?
14. Do you anticipate that you might realize any property, cash or otherwise, as a result of a divorce or separation proceeding?
15. Have you been engaged in any business during the last six years?
If yes: Where and when? What happened to the assets of the business?
Answer the questions asked. If you are asked a Yes or No question, answer with a “yes” or “no.” Don’t
elaborate. Don’t answer questions not asked. If clarification is required with a "yes" or "no" answer, make it very short. Volunteering information will almost never help you.
The Trustee may also ask how you reached the values on your assets and for more information about unusual assets or business interests. If the Trustee needs more information or documents that aren't available at the meeting, the meeting may be continued until another date when the information can be provided and any questions answered.
Lastly, try to relax. The Trustee is not a judge and realizes that you may be nervous. Your attorney will have your file and be able to assist you if any issues arise.
341 Meeting - Information"NEED TO KNOW" INFORMATION ABOUT YOUR 341 MEETING OF CREDITORS HEARING
What is the purpose of the 341 Meeting Of Creditors?
The purpose of the meeting is to ensure that you have fairly and honestly represented your assets, income and debts in your bankruptcy filing. You must appear at the meeting, and your attorney will be present with you. The Trustee assigned to your case will ask you questions about the contents of the bankruptcy schedules, and you will answer the questions under oath. You will not be asked to justify filing bankruptcy. It's strictly a fact-finding meeting. Creditors have the right to attend your hearing and ask you questions about your debts, however this is a rare occurrence. This meeting is informally called a "341 meeting" after section 341 of the Bankruptcy Code that requires it.
What Should I Expect?
The hearing room for the 341 Meetings is not a courtroom and a Judge will not be present. You should expect that there will be dozens of other people in the same room with you waiting for their name to be called by the Trustee. Immediately prior to your hearing time, your attorney will meet with you briefly to go over the procedure. Your attorney will ask you to read a pamphlet prepared by the court, and sometimes fill-out a standardized form provided by the Trustee. When the Trustee calls your name, you and your attorney will move to the table at the front of the room to be questioned by the Trustee under oath. Since the Trustee's questions are based on the information contained in your petition, you should review your petition the night before your hearing to reacquaint yourself with its contents. Your hearing should last approximately 5 minutes.
When Will My Meeting Of Creditors Hearing Be Scheduled?
Your hearing will be scheduled approximately four to five weeks after your petition is filed with the court.
What Should I Wear?
Dress business casual. Think along the lines of a nice pair of slacks, or skirt, with a collared shirt. This is a formal court proceeding, but in a more casual setting. You are having financial problems, which would suggest you do not have the resources to purchase a new suit, tie, etc. The goal is to blend in. Do not call attention to yourself or your case by the way you dress.
What Time Should I Arrive?
You should plan to meet your attorney right outside the meeting room at least 20 minutes before your scheduled Meeting of Creditors hearing time. Plan to give yourself enough time to find a parking spot, walk-up to the building (and get through security at some locations), find the meeting room, and meet your attorney.
What Do I Need To Bring With Me?
Bring your state issued identification (such as a valid driver's license) and proof of your social security number. The best way to prove your social security number is with your social security card. An original W-2 issued by your employer may substitute for your social security card - check with your attorney first about this. You do not need to bring anything else with you, unless directed to do so by your attorney.
Will I Have To Go Back To Court?
If you filed under Chapter 7, the Meeting of Creditors hearing should be your only required court appearance.
While each bankruptcy case is unique, there are certain items that any attorney will need to initially assess your specific financial circumstances and to provide potential solutions. When you come to our office for your free, initial consultation, we recommend that you bring documentation covering three areas – your income, assets, and debts. By reviewing this information, your attorney will be better able to offer accurate and applicable advice.
Lastly, bring your questions.
There may be additional documents your lawyer asks you to bring, but if you start with these top documents, you will be properly prepared for your first meeting. The more prepared you are, the more valuable you will find the consultation.
There are steps at the end of your case that are necessary to help you obtain your discharge. Depending on the Chapter of Bankruptcy that you are in and whether any liens were provisionally avoided, certain work will need to be done to help you successfully complete your case.
If you obtained a lien avoidance that is subject to a discharge order being entered, we need to either file an adversary proceeding (essentially a lawsuit within the bankruptcy to remove the lien) or in the alternative, some judges allow other procedures to formally avoid the lien after discharge without an adversary procedure.
Once you complete all plan payments and typically after the Trustee files a final report, we need to apply for a discharge, but we can't until you take your second course in Financial Management or Debtor Education. You can use the links under our Credit Counseling web page to take the second course. Make sure to type in the attorney code associated with the company you choose.
Our office will typically apply for interim or final compensation at this time but often the estate has already disbursed all funds and the Court will order a direct payment from the client.
*FROM TFS Email to Attorneys
USE TFS TO MAKE AND TAG A PAYMENT
Now that tax season is here, as a Chapter 13 client may have the onerous responsibility to make sure that one-time tax refund payment gets to the trustee on time.
TFS is here to help! With the Attorney Portal, you can assist your client in making a manual payment. Simply choose tax refund as a reason and track it for the future of their Chapter 13 payment plan, or just remind your clients that they can log in and schedule the payment themselves. REGISTER for the Attorney Portal, help avoid defaults now, and save yourself the stress of dealing with motions to dismiss later!