QUESTION
Receiving a large lump sum payment from former employer and am 3 yrs. into Chapter 13 plan-can I prevent trustee using it to payoff my creditors 100%?
Asked on Feb 11th, 2022 on Bankruptcy Chapter 13 - North Carolina
More details to this question:
My spouse and I declared Chapter 13-3 years ago in 2019. I am receiving a lump sum deferred compensation payment from my former employer from a limited partnership I was involved in from 2000-2015. The payment was deferred for 7 years after my termination of employment by the employer. I worked my "tail-end" off for this money for 5 years in the restaurant business, anywhere from 60-100 hours a week, basically trading 1825 days of my life that I will never get back to try and get ahead in life. I am horrified to have been informed by my attorney that the trustee will use the proceeds to payoff the creditors in my case 100% and discharge my 13. Is there any way avoid this?? I am aware in Ch. 7 that 75% of earned but unpaid wages is exempt. I was obligated to make the trustee aware of the payment going in to avoid bankruptcy fraud but what was the point of bankruptcy if I have to payback 100% 3 years later?!?! I am willing to hire another attorney who thinks they can save me.
1 ANSWER
4 Awards
Your attorney is the most familiar with the terms of your Plan and the policies in the District in which your case was filed. It is impossible to answer this question on an online basis because your entire case and Plan needs to be reviewed. I suggest you schedule some personal consultations with other local attorneys who have experience with Chapter 13 in your District. You should also ask your attorney about the consequences of dismissing your Chapter 13 and whether that is still possible. I can tell you that in general, your right to this distribution was in place when you filed your case. Your right to this would have been scheduled and exempted if you had exemptions available. This means it is part of the bankruptcy estate even before you earned it. In most situations, very little exemption is available to cover this kind of thing and the proceeds would need to be paid to the Trustee. My gut feeling is that your attorney is correct.
Answered on Feb 11th, 2022 at 8:00 AM
This is general legal advice only. You do not have an attorney-client relationship with Attorney Lynn E. Coleman without a signed retainer agreement and payment of any applicable fees.