Tax refund, do I need to spend it?

[downwardspiral]

I keep reading about people spending their tax refund before they file. Why do you do that? Do they take it away when you file?

I have 5k leftover from my refund. I owe my mom 5k and was thinking of giving it to her so she could at least get paid. Will that be a problem?

[soleprop]

hmm, i think i read somewhere that you should definitely not make any large payments to anyone or your case will be considered abusive. particularly your mother, as that would indicate 'favoritism' to a creditor and be considered unfair to your other creditors.

at the free consult i had, the attorney said not to pay more than $400 to any one individual at any time in the months leading up to filing for bankruptcy.

everything i've read suggests converting nonexempt assets (your tax refund) into exempt assets (clothing, household, etc).

[keepmine]

If the refund can't be covered by exemptions, spend it or run the risk of losing it.
For sure, don't pay an insider-that's a preference payment and the tristee can sue the person you paid for it's return.

[JRScott]

I would not give it to your mother. She is considered an insider and you will have to report the 5k payment. Since she is an insider then the Trustee can force her to give that 5k back and distribute it among all your creditors.

[deafbroke]

Giving the 5k to your mom even though you did borrow that much from her is consider preferential payment and isn't allowed. Use the 5k to pay off any bills not imcluded in the bky filing, or on neccessities like car repair, tires, etc.
Otherwise it will make a mess of things and you will either have to forfeit the 5k or risk having the bankruptcy dismissed.

DB

[justplaintired]

I keep reading about people spending their tax refund before they file. Why do you do that? Do they take it away when you file?

I have 5k leftover from my refund. I owe my mom 5k and was thinking of giving it to her so she could at least get paid. Will that be a problem?

Giving that amount to your Mom shows a preferential payment and is a no no. Best bet spend it down with necessities and keep your receipts. Don't take a vacation or buy a huge luxury item either. Atleast that's what our attorney told us with our stimulus check. If nothing else treat your Mom to some "free" groceries or some other necessity she is needing.

[gophermn]

Don't give the $$$ to ANYONE! Not sure your status in the filing process but once the Trustee or US Trustee see that you began "hiding" money your case will be flagged as an asset or Abuse case faster than you think.
If you need to pay bills, pay an attorney or pay anything you wish to not give up in the BK than you are 100 times more safe than handing it over.

Pending exemptions in your state, some of that money might be protected.

I had roughly 9K in tax refund and despite ALL of it was exempted - my attorney told me to still do nothing with it until after the discharge.

The US Trustee will put you under a microscope if they see money being pushed around and you better believe that will be one of the questions the Trustee will ask you in court, "Do you owe anyone any money".

Good luck!!

[downwardspiral]

Thanks