Tax Refund & Vacation

[michaelsmom]

My husband and I are coming up with the remaining money we need to pay the attorney here in the next couple of weeks to file Chapter 7 bankruptcy. We are going to call the attorney tomorrow and ask, but I am too curious and thought I would ask here before then..

We haven't filed our taxes yet so we're wondering if we need to hold off on filing bankruptcy or get it over and done with before we have to file taxes (April 15th, obviously). We are concerned that they will take our refund (we aren't sure how much we're getting back, but know it will be a good chunk as we had a baby in October). There a things we really need the refund money for (new clothes for me and our boys mainly), so what would be the safest option for us?


Also, my dad bought me and my boys plane tickets to fly to GA to visit my family the end of April. When we file taxes, will our 341 meeting be on a set date that we MUST attend, no exceptions? I am worried that they will schedule our 341 meeting during the time I will be out of state..

Anyway, I appreciate any information!

[BKDefender]

If you file bankruptcy before you receive your tax refund (DO NOT USE a 'refund anticipation loan'), then unless you can exempt all or part of your tax refund, you won't get to keep it - you'll have to give it to the trustee to pay your creditors.

You should hurry up and electronically file your tax return, and have it electronically deposited into your account (again do NOT use a 'refund anticipation loan' to get it the same or next day, it only takes about 2 weeks if you do it now.)

You can then use the refund money to buy clothes, pay a month ahead on your rent or mortgage, buy a month's worth of groceries, repair your car, take your kids for their 6-month dental visit, including pay for your BK attorney. Then after you're down to enough that your state exemptions cover what's left, you can then file BK.

As for the 341 meeting, if you already have plane tickets and the trustee's 341 meeting is scheduled for the time when you're going to be unable to attend, your attorney should immediately contact that trustee and ask for the 341 to be rescheduled.

The problem though, is if your dad bought tickets that you have in your possession and if you were able to cancel them and get cash, then they're assets of the estate that you have to list in your bankruptcy petition. If your state exemptions don't exempt them then you have a possible problem for your attorney to work out.

Is there a reason why, if you get your tax refund, that you can't wait to file BK until after you visit your family at the end of April. That seems the safest way to handle this.

--William

[michaelsmom]

Is there a reason why, if you get your tax refund, that you can't wait to file BK until after you visit your family at the end of April. That seems the safest way to handle this.

--William

Thank you so much for the information! The only reason we wanted to file soon is just to have it over with..we have been trying to come up with enough money since November, but with having 2 young boys and a lot of expenses, it has been difficult. So knowing that we are going to have enough money to finish paying the attorney is a relief.

I am still going to call our attorney tomorrow, but after reading your response and talking to my husband, we are pretty certain that we are going to go ahead and file our taxes this week and then wait until I get back in April to go through with the bankruptcy.


I have one more question: If we owe my dad money and pay him back with our tax refund, can they take that money from him?

[LSUTiger32]

I have one more question: If we owe my dad money and pay him back with our tax refund, can they take that money from him?

Yes, do not do that. If the TT questions it and finds out that it was paid to a family member he will go after that family member for the money. Spend it on "necessities".

[Pizza]

Use the money on something you would end up doing anyway - car/home repairs, stocking up on food, etc.

[BKDefender]

The trustee's power to pursue return of preference payments is unusable, per 11 usc 547(c)(8) for any total payments less than $600 during the 90 days to non-insiders and 1 year to insiders prior to filing BK. i.e. if the payments to your dad are less than $600 during 1 year prior to filing BK then the trustee may not use his turnover power to compel return of the funds.

Of course, I'm expecting that you owe your dad more than $600. But I just wanted to make sure people know that the trustee's power is not unlimited - he/she can't force return of $100.00 paid to Visa and $400 paid to your father just because it was a payment made on an unsecured debt prior to filing bankruptcy.

--William