Question regarding daring to spend tax refund before filing

[gophermn]

Ah ok, I will indeed look at the http://www.thebankruptcysite.org website and also look at other MN Tax refund questions in this forum.

Thanks all for your help

FreshLikeADaisy - all is going well now that we filed before the Sheriff Sale on the rental. Now its just a waiting game for the next 90 days (sigh).. Just think, if I didn't have that moron attny and his lovely assistant I would have been done with all this (sigh again)..

[FreshLikeADaisy]

SWEET! I am so glad to hear you got in before your deadline. But you're on your way, finally!!! Good luck!!!

[schel]

Gopher, what the atty is saying is that if the trustee wants your tax return, he will amend your Schedules B & C to include it as an asset, and then exempt it via your unused wildcard in the same breath. But it seems to me that other Minnesota posters have said that MN doesn't take tax returns. I could be wrong on this, but it's worth searching the forum on. I hope all is going well for you!!!

So where would I look for information on this issue about taxes and Minnesota?

Schel

[FreshLikeADaisy]

Up at the top of this page there's a dark blue menu bar, and across it are various menu choices: User CP, FAQ, Members List, Calendar, New Posts, Search, Quick Links, Log Out. Click on Search and put in keyworkds like minnesota tax return keep or something like that, and you will see various threads that come up as relevant. You could go out and google it too, but since it has been mentioned here more than once, searching here would be a good place to start.

I hate to cut this short, but my duly prescribed sleep aid has finally kicked in and I don't want to wake up tomorrow with keyboard button impressions all in my face.... let me know if I didn't make sense or you need help and I'll happily oblige. *yawn* Goodnight y'all.

[FreshLikeADaisy]

Schel, now that I am awake I did a search for you on this forum and I apologize, I was thinking of **Michigan**. The posts I could find that referenced Minnesota filers pretty much all said that if the trustee wants your tax refund, he will advise you at your 341; if he says nothing you're golden and you can keep it. Unfortunately, not all states will allow you to keep your refund if you receive it during or after filing, but again, if you receive your refund PRIOR to filing and it is wisely spent by the time you file, it's a non issue. I apologize again for my mistake.

[tallberry]

I hope this isn't hijacking but....what if I spend the tax return on something the trustee doesn't deem "acceptable"? can they dismiss us or simly make us give her the sum of money she doesn't approve of? We bought glasses, groceries, gas, tune-up for cars, insurance premiums, rent, bills that are due (nothing paid for future bills), paid attorney, paid taxpreparer. Do all of these sound legitimate? Thanks...I'm very nervous about this.

[phoenyx]

I hope this isn't hijacking but....what if I spend the tax return on something the trustee doesn't deem "acceptable"? can they dismiss us or simly make us give her the sum of money she doesn't approve of? We bought glasses, groceries, gas, tune-up for cars, insurance premiums, rent, bills that are due (nothing paid for future bills), paid attorney, paid taxpreparer. Do all of these sound legitimate? Thanks...I'm very nervous about this.

About how much is the refund? (Not exactly, but approximately.)

Everything you listed sounds at first glance like ordinary expenses, and nothing luxurious. The only way the items you listed would be considered luxurious is if you were purchasing a bunch of extravegant groceries like $30, tuning up a Porsche, etc. Even then, unless the refund was a large enough amount to make the bankruptcy trustee worry about, you probably wouldn't have a problem even then.

What they're trying to do is prevent people from blowing cash they have (including from tax refunds) on luxury items like vacations, TV's, golf outings to very expensive courses, expensive concert tickets, or other luxury items to try not lose the cash it in the bankruptcy.

As long as nothing can be considered a luxury item, at worst you would be looking at the bankruptcy trustee considering one of your payments on bills as a preference payment, which they can do if it was done within 90 days of your filing (or 1 year if to someone considered an "insider") and if it's of a large enough amount. Even then, they would seek reversing the preferential payment from the person you paid, rather than yourself. If all of the payments you made to bills were relatively small (I can't remember if it's under $600 or $5,000) then you wouldn't have anything to worry about here, either.

[SUB]

Do other people really have enough nerve to spend their refund before filing?

**raising hand**

One of the reasons I'm putting off filing is to make maximum use of returns/rebates.

[tallberry]

phoenyx, my return was $9000. I can definitely say that it was not for a single luxury. We did stock up at the grocery store and spent $375 on meat, frozen food, laundry soap, papertowels, stuff like that. But we have a family of 4 (with two strapping teenage boys over 6'0 and hollow legs). We typically spend $200 a week and the attorney thought that was low. If I have to pay back the trustee because she doesn't agree with something I spent the money on, then so be it, I just don't want a dismissal because of it.

[phoenyx]

tallberry, definately talk this over with your attorney. A $9,000 refund is quite large, so it might get looked at. Make sure you can detail to your attorney exactly where the money went.

Someone else might know something else I don't, but I can't see a case being dismissed over an issue like this.

At worst, I think the trustee could seek payment from you if they classify some of the money spent as not being ordinary and necessary, or the trustee could seek recovering money from whomever you paid that was over the limit (again I can't remember if it's $600 or $5,000) as a preferential payment.

Your bankruptcy attorney will be able to guide you best, and know how issues like this are handled in your bankruptcy district.

[tallberry]

Thanks.phoenyx, I appreciate the info!