Whether or not to spend tax refund & how to spend it if so!!

[lalap123]

We'll be getting around $4500 back in about two weeks. I am filing chapter 7 (hopefully) individually but won't be doing so until September at least. Do we need to hold onto the refund or will it be okay if it is gone once we file? If it is okay that we spend it, will the trustee even ask what it went to? I mean, since we got the money over four or five months prior to me filing then how could they really expect that we know what to do with it? If it's just blown a little at a time on unnecessary expenses will this be an issue?

Bottom line, I don't want to go out and blow it on new handbags and shoes, but it would be nice (since we have to use the money up anyway or the trustee will just take it if it's sitting in the bank) if we could just eat out a few times a week and buy the kids some clothes to last them over the next year or two since we don't know what kind of financial situation we'll be in at that time. Any other good advice on what we can do with the money?

Should our activities be limited only to paying our mortgage in advance and stocking up on paper towels and rice and beans?? If so it will take us a while to spend it....

[LuciluS]

We will not be filing maybe 9/30 and we are getting back a large refund. Can't help you with the kids's clothes, but we are putting new tires on both of our vehicles and doing some maintenance on my vehicle and to our home.

Our Attorney told us to keep receipts to match to our refund. I also had to do the same for a Car Accident Settlement check I received in Feb. of $5,000. Of course, that wasn't hard to do as I needed $4,664 worth of dental work done due to the meds I take (I'm disabled due to the wreck....$5,000 wasn't squat, but I wanted lawsuit settled so we could file).

We haven't paid our credit cards since Sept. 2008. Phone calls have started again; however, I was just diagnosed with skin cancer. They ask me why we didn't file, I tell them the truth. I'm not about to file until I get a clean bill of health.

Luci

[keepmine]

6 months is plenty of time to spend down.
I'd make sure I had reliable transportation, any home repairs that are needed. Any dental work or medical treatmenst you've put off over the years. Anybody need new glasses/contact lens? A lot of reasonable and necessary things to spend the money on.

[JoeBankrupt33]

What you need to worry about is your 2009 tax refund that you'll get in 2010. Unless you can exempt it, the trustee could take a prorated portion of that refund.

For instance, let's say that you file on 9/1/09 and your federal refund that you will get in 2010 is about the same as your current refund ($4500).

8 months worth of that refund will be an asset of the estate unless you exempt it.

So, they could potentially take 8/12 of $4500, which is $3000.

[Mi Bankruptcy]

What you need to worry about is your 2009 tax refund that you'll get in 2010. Unless you can exempt it, the trustee could take a prorated portion of that refund.

For instance, let's say that you file on 9/1/09 and your federal refund that you will get in 2010 is about the same as your current refund ($4500).

8 months worth of that refund will be an asset of the estate unless you exempt it.

So, they could potentially take 8/12 of $4500, which is $3000.

Joe is right. If you are not close to using your exemptions have your attorney exempt your tax return for 2009 ( received 2010) My attorney told me not to worry about it and I made him list it in my exemptions. You can do a search for my name to see how he listed it.

[lalap123]

So should I or shouldn't I worry about how to spend our 2008 refund (the one we're getting back in a week or so)?? I've read two different things...not to worry about it b/c the trustee shouldn't care how you spent things in the past prior to BK and do worry b/c they will ask for receipts to show what you spent it on. It seems like, if they really care how you spend it, it would only be acceptable to them if you spent it paying on the money you owe your credit cards. Anything else should look bad to them, whether it was repairs to the house or going out and blowing it at the casino! I mean, what can they do if you go out and gamble it away? Make you pay it back?

[OhioFiler]

So should I or shouldn't I worry about how to spend our 2008 refund (the one we're getting back in a week or so)?? I've read two different things...not to worry about it b/c the trustee shouldn't care how you spent things in the past prior to BK and do worry b/c they will ask for receipts to show what you spent it on. It seems like, if they really care how you spend it, it would only be acceptable to them if you spent it paying on the money you owe your credit cards. Anything else should look bad to them, whether it was repairs to the house or going out and blowing it at the casino! I mean, what can they do if you go out and gamble it away? Make you pay it back?

I would avoid the casinos and use it on any and all things you NEED right now. Avoid luxury purchases.