Using tax money for rental deposit?

[imoverit]

We are looking to file Ch7 sometime in April/May. We usually file our taxes right away and get our refund back sometime in Mid Feb. We usually get back around 5k. I was going to use the tax money to retain a lawyer and hold on to the rest to put down on a rental home (we are dumping ours). We are currently living in our home and hoping to make it until summer before foreclosure. Can we exempt the money we want to put down on the rental? Or should we actually PUT it down on a rental and just move? Does the trustee actually ask what you spent your tax money on?

[justbroke]

Can we exempt the money we want to put down on the rental? Or should we actually PUT it down on a rental and just move? Does the trustee actually ask what you spent your tax money on?

You may be able to use a wildcard exemption to exempt the money, but I don't think you need to worry about that.

If you use it for living expenses and your lawyer, then the Trustee won't say anything about it.

If it's used for a rental deposit, it is actually your money (property), but held by the landlord as security. I haven't heard of any Trustees going after deposits. I have a couple thousand worth of deposits to the utility companies. These were listed on my Bankruptcy schedules as such.

[lrprn]

Can we exempt the cash we want to put down on the rental? Or should we actually PUT it down on a rental and just move? Does the trustee actually ask what you spent your tax money on?

Whether you can exempt the cash after paying your lawyer or not depends on your state's bankruptcy exemptions and how much cash they protect (if any) when you file. This is an excellent question to ask your lawyer or ask during your initial consultations with 3-4 experienced bk lawyers in your area if you haven't decided on a lawyer yet.