How do I list cash gifts received?

[rhp]

I received cash(checks) from my parents for Christmas, my birthday, and for school tuition. Probably totaling $5k. How do I list these? Is it going to be a problem? I should still be below the median, but there are deposits into, and tuition and book payments from, my checking account.

[rhp]

To clarify, that $5k is the amount over the last year.

Right now I have the six month average plugged in as "Income from all other sources" on my means test and "Other monthly income" on Schedule I.

[AngelinaCatHub]

You probably won't have a question regarding the school and it's expenses. Keep your receipts. Otherwise I believe you have to put that in as income, however, make a comment on that line as a Christmas gift. It is not really a reliable income but a windfall of sorts. Still you have to list it. 'Hub

[debee]

Schedule I is your income going forward. I wouldn't bother mentioning gifts that you may (or may not) receive from your parents in the future. Should you quarrel with them or should they fall on hard times, then what? If it were me, I'd leave it off.

[rhp]

But I should still include it in the means test, yes?

I keep forgetting that schedule I is what you expect for income going forward. Same could be said then for the amount my GF pays towards rent and other bills, I suppose. Maybe it belongs in the means test but not in Sched I. I think that point was made on another of my threads.

[debee]

Yes, I would declare the income on the means test. The girlfriend/household issues are pretty complicated so I would be talking to an experienced bk attorney about that before filing. Good luck, rhp.

[rhp]

Thanks. I'm curious to hear the lawyers' take on the "family size" issue in Arizona.

[laurannm]

We ran into the same issue where my parents gave us a cash gift a month or so before filing. It would have a made huge difference on our means test, so to get around it we listed my parents as a creditor (instead of as income). If you do this your parents will receive a notice in the mail about your filing (just like a regular creditor), so be aware if you weren't planning on telling your parents. Otherwise, its a fairly common practice to list family members as creditors.

[Toby629]

We received money gifts from various family members in the year prior to our filing BK. Our lawyer told us not to list any of it as they were gifts, so none of the money gifts were even mentioned in our BK petition. Could be different in each state as whether gifts of money have to be listed on one's BK petition.

[tcreegan]

Hi rhp,

Thanks. I'm curious to hear the lawyers' take on the "family size" issue in Arizona. ....I don't think you are alone here. Household or family is not defined in the BK code and, surprisingly, there is very little caselaw on this. And given that household size significantly effects the means-test you would think this would have been settled by now. I can't find diddly on this in the 9th circuit and nothing local to AZ

From the little I have read there seems to be a range from IRS dependents only to everyone in the house. Definitely this will be a local trustee/local Bk court practice; need a local BK attorney who knows what will fly.

Tom in Colo

[AngelinaCatHub]

We ran into the same issue where my parents gave us a cash gift a month or so before filing. It would have a made huge difference on our means test, so to get around it we listed my parents as a creditor (instead of as income). If you do this your parents will receive a notice in the mail about your filing (just like a regular creditor), so be aware if you weren't planning on telling your parents. Otherwise, its a fairly common practice to list family members as creditors.

We received money gifts from various family members in the year prior to our filing BK. Our lawyer told us not to list any of it as they were gifts, so none of the money gifts were even mentioned in our BK petition. Could be different in each state as whether gifts of money have to be listed on one's BK petition.

I believe both contributors here are in error. Lariannm a gift is income. You cannot put it into a debt if it is a gift. If it were a loan, that is one thing. Has the money been spent on exempt essentials? If not, and if you got it after filing, it became property of your estate as soon as it hit your hand. Since you got it before you filed, the left over money not spent is an asset.

Toby629 the lawyer is wrong, money gifts, gifts, found money et al are income. If you win the lottery, you can't call it an investment. Even unemployment is counted although it is exempt. Watch found money or unlisted debts, as we found out that the Trustee has ways and it cost us 10K in Trustee payback and a 2004 examination. Not a good feeling. 'Hub

[rhp]

Thanks, everyone, for the replies! This one is on my list of questions for the local attorneys.

[laurannm]

'Hub,

I disagree, you certainly can list the cash gift as a debt if it was received before filing (and list the gift giver as a creditor). Is it technically a "loophole" or "gaming the system" or whatever you want to call it? Sure...but as long as the person who gave you the gift is willing to be listed as a creditor (which in my case and the OP case, it's a family member so in this scenario it usually isn't a big deal), it's an easy fix to the problem, one that 99.9% of the trustees out there aren't going to raise an eyebrow about. We did it on ours (and it was $3k so it would have had a significant impact on our means test) and not a peep from the UST or anyone else

[debee]

It's not a "loophole" though, it's perjury. The giving party may be willing to lie as well, and the trustee may never suspect, but neither of those facts make it any less dirty.

Ethical decisions are personal and I don't concern myself with the choices others make, but a spade's a spade. Some would just let the gift drop off the look-back and then file. Others would lie and ask others to lie as well. In the end, we all need to be able to look in the mirror every morning and feel okay about the person staring back.