IRS Refund and Filing Timing

[tpod]

I am in Ohio. We will be filing a Chapter 13, but have time to prepare it. Our house payments are current, just dealing with the normal phone calls. Question is we received our IRS refund in January, $5,000.

Now what? If we wait several months is it exempt? Do we have to somehow repay the $5,000 when we file several months from now?

I have not discussed it with our attorney yet, since he is obligated to give me the "right" answer.

HELP!

[lrprn]

Since you received your refund before filing, you need to find out how much of it (if any) can be protected by your state's bk exemptions when you file. This is something your lawyer can tell you.

If you can't protect the whole $5K, then you have time to spend it down to what you can protect by purchasing legitimate, non-luxury items for your family. Catch up on healthcare, buy new clothes, pay off late utilities, use it for a down payment on a more reliable car that can get you through the next 5 years.....you get the picture.

DO NOT pay off any unsecured creditors and for heaven's sake, DO NOT give more than $600 total to any insiders (family members or business associates) during the 90 days before you file. Both of these actions can cause problems when you file and delay your confirmation.

Work with your lawyer to figure out the best path for you to follow. Hopefully you'll be able to keep all or most of the cash.

And right now immediately change your IRS withholdings so that you don't get back so much refund next year, especially if your Ch 13 trustee ends up being one that takes all or a portion of your refund over a specific amount every year (and many do). Here's links to how to adjust your IRS withholdings - this one can be printed http://www.irs.gov/pub/irs-pdf/p919.pdf and this one can be done interactively online http://www.irs.gov/individuals/artic...=96196,00.html

[EricaCallaha]

Agreed....Well put..

Good luck.

[sassiebaz]

Ok, so how does that work, if my tax refund was direct deposited into my bank by accident and then the bank took my past due owed on two loans????? Erica, you know the situation......but anyone else know? I talked to my attorney office that I haven't yet retained. They said they cannot protect the refund since I haven;t filed yet. But, what will that do as far as preferential payments? Will it be ok?