Can I cash my company stock after Chapter 13

[MikeColorado1968]

I filed Chapter 13 in September of 2010 and have company gifted stock that I would like to cash out. I am on a 60 month payment program to pay off my bankruptcy. I was issued the stock in 2003, 2004, and 2008 as Incentive Stock Options Awards. Can I sell off/cash out my stock with or without approval of the chapter 13 trustee?

[1stStep]

Probably not...it should be included as an asset of the BK estate. That being the case, the trustee decides what to do with it.

If you have not disclosed it, you better have your attorney amend...

[jq26]

You of course would have had to dislcose the stock, as this was an asset at the time of your filing. That being the case, you are merely exchanging one form of an asset (stock) into another form (cash). It was income when you earned it in 2003, 2004, and 2008. Now it is an asset.

If you didn't disclose the stock at time of filing (you should have) and you are claiming this is after-acquired property (not correct in my opinion), then you'd have to go to your approved plan form and see what it says. It may or may not state you need to report all after-acquired property to your bk trsutee. If it requires it, then report it. If it doesn't state you are required to report it, then I would not report it. The Code itself does not require it unless it is a windfall and within a certain period of time since filing. In your case, its neither so I wouldn't poke the bear.

So in summary, you should have reported it as an asset at filing. And if you did, then this is no issue because this is nothing more than an asset swap (stock for cash).

[Seadragon]

But You can have the attorney fall on the sword but the trustee may sanction you.

[MikeColorado1968]

OK, so I looked at my documents from my BK and it looks like there are no stocks listed. To tell you the truth I just didn't even think about them. I didn't think they were actually worth anything at all. Just thought they were a token from my employer not really worth anything in the real world. The reason I found out about my stocks is I got an email from our corporate paralegal about a firm that offers a discount to exercise my stocks on a "cashless" basis, whatever that is. My bad I guess. Now I need to fix this and get it straight. I don't like doing anything that could be considered fraudulent or illegal. The stocks appear to be worth about $50k if sold minus taxes.
I was reading some things on the net and it seems like most of the time in a Chapter 13 most of your assets are not liquidated but these stocks may be different. Does anyone have any advice or information for me about if it's normal to have to liquidate your stocks in a chapter 13.
I know I have to contact my attorney and get an amendment filed but hope it doesn't make me re do my entire BK or cancel it.
I have also just taken a $800 per month pay reduction at work. So amending my BK looks more and more like what needs to be done.

[jq26]

discuss with attorney. If it was worth 2-3k, then maybe let it slide. But this is a huge asset. You'd be better off discussing with attorney AND likely not liquidating.

[jq26]

Is it any sort of retirement account? That would clearly be the best situation.

[Bigwoodystyl]

I'm curious how does one file BK and at the same time not know that s/he has $50,000 worth of stock options?

[MikeColorado1968]

Unfortunately it is not a Retirement stock option. I don't know allot about stocks but I know that they are not fully exercisable for 4 years after I was rewarded them. I was granted 1000 shares in 2003, 1000, shares in 2004 and 500 shares in 2008. Of the 500 awarded in 2008 only 375 are currently exercisable now and the other 125 are not exercisable until 12/2012. Uggh, maybe just as someone said just let sleeping dogs lay. I think I can still cover my Trustee payment but it will be tight.
It seems like in some states that if you file Chapter 13 they typically do not liquidate your assets but in some states like California they commonly do.
Thanks!

[MikeColorado1968]

Originally Posted by Bigwoodystyl

I'm curious how does one file BK and at the same time not know that s/he has $50,000 worth of stock options?

I was looking back through my paperwork from my employer and found only one notification letter about stocks back in 2009 but that's it. I don't have a broker and have never dealt with stocks or bonds or investments or trading or anything. Only thing I have ever dealt with is my 401k. Obviously I am uneducated in finance.

[jq26]

The problem is that federal bankruptcy law does not allow unsecured lenders to take less in a Chapter 13 than they would have gotten in a Chapter 7 on the date of your filing. Therefore, your Chapter 13 proposed plan amount would have been much higher had the non-exempt stock been included into the bk estate upon filing because the tens of thousands in stock would have been avaiable to creditors in a Chapter 7. The payout ratios in the 13 plan would likely have been much higher because of it. You see?

That's a totally different question than what happens when you get income after a confirmed plan is in place. You don't have income. You have assets. So talk to your attorney. This is above the pay grade for a free creditboard...

[MikeColorado1968]

Thanks for all the information. I'm understanding more now. At the time of my BK my stock was not worth as much as it is now. It was about worth about $17800. The amount I am paying back to my creditors is about $49000 over 5 years. So I guess it's time to either bite the bullet and talk to an attorney and get it taken care of...Like I said I hate doing anything that can be taken as fraudulent. Thanks again for the information.