spending tax refund

[Trixie007]

ROFLMAO!! This made me chuckle! Imagine showing up to your 341 and handing over $500 in Safeway or Publix gift cards to the trustee??!! Once puchased, they have no cash value...how would this "asset" be distributed to any creditors??? I dunno, this just made me giggle

There's no difference between a gift card and cash in hand in the case of BK. Otherwise, anyone with thousands of dollars in-nonexempt cash could just buy gift cards and keep all their assets.

[OhioFiler]

ROFLMAO!! This made me chuckle! Imagine showing up to your 341 and handing over $500 in Safeway or Publix gift cards to the trustee??!! Once puchased, they have no cash value...how would this "asset" be distributed to any creditors??? I dunno, this just made me giggle

It's funny here but the Trustee is emotionless. He/she merely looks at assets and doesn't care whether it's cash or Chuckie Cheese tokens. If he can redeem it for money to pay the creditors he will.

[2Bshinyandnew]

It's funny here but the Trustee is emotionless. He/she merely looks at assets and doesn't care whether it's cash or Chuckie Cheese tokens. If he can redeem it for money to pay the creditors he will.

That was my point, most of these gift cards CANNOT be redeemed for cash. What is the trustee going to do, send Citibank a $100 grocery store gift card as payment from a debtors estate? The trustee wants assets that can be liquidated to cash, right? It says right on a Publix gift card (my local big chain), "This gift card cannot be redeemed for cash". If it cannot be redeemed for cash, does the trustee get to pocket it? Will he auction it off? Will he turn the $100 card in for 10 $10 cards to send to 10 creditors? Will he put it on craigslist for $80? Is there some sort of Gift Card redemption company out there to handle this? I'm being sarcastic (sort of).

Anyone have any real word experience with this, not just speculation? Now I'm curious.

There's no difference between a gift card and cash in hand in the case of BK. Otherwise, anyone with thousands of dollars in-nonexempt cash could just buy gift cards and keep all their assets.

Well, yes there is a difference if the gift card cannot be redeemed for cash. The terms on the card are quite clear. Can the trustee use his magical trustee super-powers to undo the purchase and get cash back? The above scenario (thousands of dollars in grocery store gift card purchases) would be obvious fraud...how would that be handled?

[OhioFiler]

What could you get for them at a yard sale? I'd pay you 80 cents on the dollar for valid gift cards.

The trustee could find a market for them and convert them to cash for debt payment.

[mysterie91]

Our attorney gave us a long list of things that were OK and a list of things the trustee would question.

Things we purchased were things you will always need and won't go bad - toilet paper, paper towels, kleenex, mop and bucket, cleaning supplies, maxi pads, diapers, wipes, a few OTC meds, tires for the car...things like that.

She was VERY specific and did say that gift cards are a no-no becuase they are a cash-equivalent. The trustee would take them. Also vacations or anything "frivelous" were out. The money had to spent on necessities - things that you would have to expend cash for no matter what.

[Trixie007]

Well, yes there is a difference if the gift card cannot be redeemed for cash. The terms on the card are quite clear. Can the trustee use his magical trustee super-powers to undo the purchase and get cash back? The above scenario (thousands of dollars in grocery store gift card purchases) would be obvious fraud...how would that be handled?

In our eyes there may be a difference, but in the Trustee's eyes, there is not. Never mind what it says on the card - the holder of the card can redeem it for the value of the card by purchasing products, it is an asset on hand when you file. Many people on here have said that their lawyers (who have real world experience with this) have told them this is a no-no and that the trustee does view gift cards as an asset. If purchasing thousands of dollars in the gift cards would be obvious fraud, why wouldn't purchasing $50 worth?

The trustee could handle this any way they deem necessary, such as making you pay cash to them for the value of the card...

Obviously, everyone filing is going to have to decide what to do for themselves as they get closer to filing, but on this forum the rules are clear about not giving advice on how to perpetuate fraud in BK - and posting mental run-arounds here about why this would be okay for someone to do could be confusing to people who are trying to figure out what is okay and what is not.

[OhioFiler]

In our eyes there may be a difference, but in the Trustee's eyes, there is not. Never mind what it says on the card - the holder of the card can redeem it for the value of the card by purchasing products, it is an asset on hand when you file. Many people on here have said that their lawyers (who have real world experience with this) have told them this is a no-no and that the trustee does view gift cards as an asset. If purchasing thousands of dollars in the gift cards would be obvious fraud, why wouldn't purchasing $50 worth?

The trustee could handle this any way they deem necessary, such as making you pay cash to them for the value of the card...

Obviously, everyone filing is going to have to decide what to do for themselves as they get closer to filing, but on this forum the rules are clear about not giving advice on how to perpetuate fraud in BK - and posting mental run-arounds here about why this would be okay for someone to do could be confusing to people who are trying to figure out what is okay and what is not.

We have a Honey Baked Ham gift certificate for $50 that we've held for a couple years. I think I'll list it as an asset to show the trustee how thorough and honest we are!

[Trixie007]

We have a Honey Baked Ham gift certificate for $50 that we've held for a couple years. I think I'll list it as an asset to show the trustee how thorough and honest we are!

[Over our heads]

I bet half of the gift cards up for sale on Ebay are from US trustees! While they won't get face value for them, they can get pretty darn close.

[2Bshinyandnew]

In our eyes there may be a difference, but in the Trustee's eyes, there is not. Never mind what it says on the card - the holder of the card can redeem it for the value of the card by purchasing products, it is an asset on hand when you file. Many people on here have said that their lawyers (who have real world experience with this) have told them this is a no-no and that the trustee does view gift cards as an asset. If purchasing thousands of dollars in the gift cards would be obvious fraud, why wouldn't purchasing $50 worth?

The trustee could handle this any way they deem necessary, such as making you pay cash to them for the value of the card...

Obviously, everyone filing is going to have to decide what to do for themselves as they get closer to filing, but on this forum the rules are clear about not giving advice on how to perpetuate fraud in BK - and posting mental run-arounds here about why this would be okay for someone to do could be confusing to people who are trying to figure out what is okay and what is not.

Geez...I don't even have any gift cards. I wasn't trying to instruct anyone or confuse anyone as to what to do or not do with gift cards...I was genuinely curious. I'm STILL curious and I don't really see how asking this on a bankruptcy forum is trying to perpetuate bankruptcy fraud. One poster even mentioned Here:

Okiemom2008 you need to check with someone in your own state but in AZ our bk attorney says we can spend our tax refund on $750 debit cards from a grocery store to save for the bk process. Your state may allow more or less but the answer is yes you can. Our attorney also stated that Costco and Sam's were out. They have too much nonfood inventory and to stick to true grocery stores like Kroger's, Fry's, Albertson's, etc. She also said we could take a vacation with that tax refund money (yeah right) but it's a legit use of the tax refund if you can't find anything else. Just make sure and keep all receipts to prove where the money was spent.

that their attorney said it was OK to buy $750 worth of non-redeemable gift cards. If that is an option that is OK to do depending on your states exemptions, why can't we talk about it?

[OhioFiler]

I would not invest in gift cards.

If it's presumed abuse for buying $1,000's of gift cards why wouldn't the trustee complain if you had $750? I see no difference.

I see them as an asset. I'm sure the trustee does as well.

[Trixie007]

Geez...I don't even have any gift cards. I wasn't trying to instruct anyone or confuse anyone as to what to do or not do with gift cards...I was genuinely curious. I'm STILL curious and I don't really see how asking this on a bankruptcy forum is trying to perpetuate bankruptcy fraud. One poster even mentioned Here: that their attorney said it was OK to buy $750 worth of non-redeemable gift cards. If that is an option that is OK to do depending on your states exemptions, why can't we talk about it?

Ok, my response was a little strong, sorry. I was looking at this thread, and it was starting to sound a little like a how-to for withholding assets from your BK, because let's face it, a spendable gift card is an asset... whoever posted that about the $750 gift cards being ok is being given advice that the majority don't hear from attorney's. I would think that's not the norm! I guess if we all consider the spirit of the law (declaring all assets) then this is a no-brainer.

[okiemom2008]

I hate how they make it IMPOSSIBLE to get ahead after bankruptcy. It is almost like they want you to be back doing the same thing in 10 years.

[OhioFiler]

I hate how they make it IMPOSSIBLE to get ahead after bankruptcy. It is almost like they want you to be back doing the same thing in 10 years.

Chapter 7 gives you a clean slate. It's a decision we make as individuals whether we change our spending habits or not after we get the clean plate.

I've been working on a budget for us post-bankruptcy that we will FORCE ourselves to follow. We'll be able to move expenses around within the budget (i.e. buy less food and buy more clothes).

Any surplus at the end of the month will go directly to savings or investments.

[okiemom2008]

Chapter 7 gives you a clean slate. It's a decision we make as individuals whether we change our spending habits or not after we get the clean plate.

I've been working on a budget for us post-bankruptcy that we will FORCE ourselves to follow. We'll be able to move expenses around within the budget (i.e. buy less food and buy more clothes).

Any surplus at the end of the month will go directly to savings or investments.

It is hard to budget when you do not have money leftover after paying the bills.

I guess the answer is no to gift cards. Oh well