Buying assets back from trustee with 401k loan?

[twono]

I know that by just reading the title to the thread the answer would be HELL NO!!!

But.....I was DC'd over 2 months ago. I have some assets that are to be surrendered to the trustee but they have not been 'taken into custody' so to speak.

The money from the sale of the assets by the trustee would be going to my back taxes. Problem is, IRS is on my arse and the trustee seems to not be in a hurry to close my case. BTW, my attny has been great and is working diligently with me still. (Over $3500 for ch.7 so he should be earning his premium, right?) I do not want a tax lien, garnishement, etc by the IRS obviously. My credit reports are clean prior to BK and they WILL remain clean post BK.

So, i've all but yanked some money out of my 401k to go ahead and buy these assets from the trustee. The money would then go directly from the trustee to the IRS. But, I will still owe some to the IRS. I have been in touch with the IRS and i have about 6 wks to PIF or setup a payment plan with them. Interest has been adding up in the meantime though.

My reason(s) for pulling 401k money to buy assets back:

1. I'm worried about not getting the most $$$ out of the assets. Assets will be sold at auction by the trustee and may sell for 50-75% of what they are actually worth. I know i can sell them myself for what was listed on the BK asset list, which was agreed upon by the trustee. I don't want $30k worth of assets to only bring $15k at an auction. I would then be stuck with an outstanding tax bill of $15k still.

2. Time. I want this case closed and over with and the IRS paid. If i can pull the money out of my 401k, pay the trustee....trustee pays the IRS....and be done within 2 wks or so, that's what i feel i should do.

As far as the 401k loan goes, i would sell the assets myself and immediately pay the 401k loan off. I should easily being able to repay the 401k loan in 2 months.

Attny is onboard with this and it can be done with some court filings.

Thoughts? 2nd opinions? Does this make good sense? 

Thanks all

[FireMedic1]

Whoa. Little in depth for us regular folks. Maybe this applies. Of course your lawyer knows best in this situation. Cant tough this with a 10 foot pole. Here ya go. I guess?

https://www.alllaw.com/articles/nolo/bankruptcy/keep-nonexempt-property-chapter-7.html 

[Shooting-For-800]

Have you been told that you all your debt will not be written off if assets are worth less than expected?

[Shooting-For-800]

FTR...I doubt any asset you have will get even 50% of what it is “worth.”

Trustees do have options to allow people to buy back items over time (like a year).

How much do you owe?

[despritfreya]

In this particular situation you really need to go with your attny’s advice.

In many instances a Trustee is not going to just sell the items back to you. He is going to use your “offer” as an opening bid and notice out a bk sale. You would then wait to see if there are any other bidders. If you are the high bidder you “win”.

Even if your Trustee accepts your offer without soliciting bids, it will be quite a while before any of those funds are distributed to creditors. The Trustee must take several time-consuming steps before he can pay out money. It could take as long as six months (maybe more) unless you seek a Court Order directing an early distribution to pay the priority taxes - something that may or may not be granted.

Even when the Trustee pays out the money, he/she is not going to be paying post petition interest on the priority tax claim. He/she only pays the priority tax as stated in the Proof of Claim. Since the priority amount is not subject to discharge interest will continue to accrue at approximately 6% per annum. That interest, along with whatever priority amount is not paid, will survive the Discharge.

If you decide to enter into an installment agreement try to keep the payment to the IRS at a minimum. Your argument for this is that a good portion of the claim will be paid through the Chapter 7. Try to get the installment payment applied to the post petition interest that is running on the priority claim.

Again, your attny will know what is the best approach in your district.

Des.

[twono]

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@Shooting-For-800 wrote:

Have you been told that you all your debt will not be written off if assets are worth less than expected?

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Are you asking if my TAX debt won't be written off?  The assets won't cover my back taxes..$30k.  But are valued at $25k.

[twono]

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@Shooting-For-800 wrote:

FTR...I doubt any asset you have will get even 50% of what it is “worth.”

Trustees do have options to allow people to buy back items over time (like a year).

How much do you owe?

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This is exactly why i'll be much better off if i buy them back from trustee at actual cash value.  Then trustee will put that money toward back taxes since IRS has priority.  $30k

[twono]

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@despritfreya wrote:

In this particular situation you really need to go with your attny’s advice.

In many instances a Trustee is not going to just sell the items back to you. He is going to use your “offer” as an opening bid and notice out a bk sale. You would then wait to see if there are any other bidders. If you are the high bidder you “win”.

Even if your Trustee accepts your offer without soliciting bids, it will be quite a while before any of those funds are distributed to creditors. The Trustee must take several time-consuming steps before he can pay out money. It could take as long as six months (maybe more) unless you seek a Court Order directing an early distribution to pay the priority taxes - something that may or may not be granted.

Even when the Trustee pays out the money, he/she is not going to be paying post petition interest on the priority tax claim. He/she only pays the priority tax as stated in the Proof of Claim. Since the priority amount is not subject to discharge interest will continue to accrue at approximately 6% per annum. That interest, along with whatever priority amount is not paid, will survive the Discharge.

If you decide to enter into an installment agreement try to keep the payment to the IRS at a minimum. Your argument for this is that a good portion of the claim will be paid through the Chapter 7. Try to get the installment payment applied to the post petition interest that is running on the priority claim.

Again, your attny will know what is the best approach in your district.

Des.

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Thanks Des.  Attny didn't give me any advice.  This was all my idea and he is on board with.  

When i spoke to the IRS, i told them about the BK, the assets involved and that they will most likely be PIF.  The agent gave me the most time available to puut a hold on further collections by the IRS, 90 days.

Also, at the 341, the trustee asked me if i wanted to buy any of the assets.  Said he didn't have room for all this stuff.....I thought it was a 'trick' question of sorts, and basically said 'hell no, im broke, that's why im here.'

But after the 341 and talking to my attny, i did cut a check for 3 of the assets already....that was 3 months ago.  I did not relinquish the titles to those assets.    

My attny said he will submit the offer to the trustee.  Then a federal court order will be made to authorize this 'deal' or something to that affect. 

The offer is the total amount of $$$ that we listed the assets being worth.

By offering the total cash value of the assets in question, trustee will forego the hassle of repoing, auctioning, etc, etc....Seems very simple and easy to transfer moneys from my 401k to the trustee to the IRS.  Case closed.

[twono]

BTW, no creditors will be getting any funds.  ONly the IRS and there won't be quite enough to pay them completely.

[twono]

Thanks for the replies, but i was really just wanted opinions on the idea of smacking my 401k for $25k to do this.  The idea of optimizing my debt to the IRS and getting it paid.  With buying the assets back from the trustee, i could be saving $10-15k.

I'm not concerned with the logistics of doing this through the trustee/court/etc....i have a handle on that.