Tax return question - another!

[NewPage]

I was just looking over the docs the trustee in my area requires. One section says:

If any tax refunds or other accounts receivable were due to the debtor as of the filing date, (other than support, disability, wages, social security, etc.) THE DEBTOR IS NOT AUTHORIZED TO CASH OR DEPOSIT SUCH CHECKS WITHOUT PRIOR WRITTEN APPROVAL.
Be prepared to deliver such checks to the trustee without negotiation or endorsement.

This has me wondering....we have received (as of today) our state and federal refunds. They are as good as gone and will be paid out before I sign and the petition is filed (planning to do that late next week). The part that says "....were due to the debtor as of the filing date" -- what we already *have* and are spending, those aren't counted as such, right? If we did not receive them before filing, then he would want the checks, correct? Just want to make sure I am understanding properly.

[NewPage]

Also, I just made this up to show how it's being paid out. I'm assuming the trustee will want to see this, along with receipts/bills to prove the amounts paid?

[daylate]

Two things come to my mind- because you just got a large refund-then the trustee might consider the quarterly est pays to be too much if they would result in another large refund. Second point that might raise concern is the payment to the orthodontist-if you already owe that, it might be considered a preferential payment made to a creditor. Not 100% sure about these two but hopefully some others will chime in. Good luck.

[NewPage]

We don't already owe the ortho -- my son is scheduled to get his braces on 2/24. At that appt we have to have at minimum $1320 down payment; the rest can be paid over 24 months, so we were just going to put a big chunk on the total of $5280, to make the remaining payments as low as possible.

I feel that the federal payment is too large, but that is my husband's doing. TurboTax calculates quarterly payments based on criteria you give it; he told it to use 2010's numbers and that's the payment it spit out. I'm asking him to recalculate to a lower figure.

[NewPage]

Okay, what about this?

+7937

-440 health insurance
-414 business dues
-540 business expenses (county data access)
-5016 braces in full at time of service (not a previous bill; reflects paid in full discount)
-900 federal quarterly tax payment
-400 state quarterly tax payment
Remainder of $227 spent on utilities and/or other living expenses

[NewPage]

I wish my lawyer would email me back!

Anyone? Opinions on new disbursement plan?

[NewPage]

The braces would not qualify as preferential, would they? It is not an existing debt, as they have only done a free consultation at this time. Now, the appt is made to have them put on, but as I said we have no existing balance. I plan to walk in there with the minimum down payment OR the whole cash discount fee and pay for them the day he gets them put on, which is the 24th. I will be signing my BK papers later that day or the next.

[dontburnthep]

My attorney sucks, so take this with a grain of salt, but taking care of medical and dental pre-filing is perfectly OK.

[Meatstick]

Newpage, in our case we paid one of our son's complete Orthodontic bill of $2300 for braces's using part of our 2009 Fed Income Tax Refund. We had a refund in excess of $10k and had an itemized listing of allowable expenses that we presented to the TT at our 341. I started rattling off what we spent our State/Fed refunds on and the TT cut me off and continued on. As a matter of fact there was never any mention of seizing our 2010 refunds, our case was discharged and closed and we have never received any paper request.

Only problem yours may have is the estimated tax payments but that's foir your attorney to answer. Good luck !

[NewPage]

Meatstick -- Did you wait 90 days to file your case after paying the orthodontist? Was that an existing bill or did you pay at time of initial service (ie getting the braces on)?

[tcreegan]

Hi NewPage,

No help on the orthodontist I'm afraid...

...but on your first post here, you were asking if you were right about getting the refund before filing makes it not "due at time of filing"

You're right

Not many posts about pre-BK "pay forwards" ...be sure to let us know how yours work out!

Tom in Colo

[NewPage]

I think I'll just keep posting in this thread about the refund and how it's spent; I've got things confusing enough around here. Sorry!!!



I am writing a letter to my attorney; hopefully I will get an appt with him out of this, and he will have time to look it over carefully, rather than communicating through email alone, which gets confusing. Please look over the numbers and give me your opinions. I know that the ortho amount is still high, but I am hoping that by it being *less*, it will be more acceptable, so to speak.

(Under the accidental big splotch it says "Earned Income Credit")




On this second one (my "half"), I forgot to add in dental work for myself, probably around $400-$600):

[daylate]

Back to an earlier point that Tom mentioned, once you receive the refunds they are now "Cash" not "Refunds Due", therefore the fact the cash came from a refund is not relevant. In my mind you need to forget about the refund aspect of this and only worry about the ortho payment as HHM explained in the other thread you posted about this topic. Good luck.

[Meatstick]

It was not an existing bill, we paid the entire amount that was due after the consultation appointment. The payment was made in March and we filed in April, had our 341 in May and the TT asked what we spent a $10k plus return on. I made a list and started to rattle off what it was spent on and the TT cut me off and said that was enough and moved on. We were way over the median when we filed and based on our attorney's advice and following that advice we had no problems at all and were discharged in July and closed in August. The TT made no mention of wanting our 2010 Return/Refund and we never received a letter requesting either and just yesterday our 2010 State/Fed Refunds were direct deposited.

Just remember each and every case is different. Why not spend those funds on FOOD instead of tax payments ?

[HHM]

I agree with the others, if you got a refund, that negates the need to make quarterly tax payments and will certainly raise a red flag.

We have already discussed the Orthodontist. (meatstick: NewPage described that she would be pre-paying for a regimen of treatment, so not all of the Ortho fee would be earned by the dentist, so that was the issue in this situation; all I am saying is that there is a risk). Everything else seems okay.

It sounds like Oregon has an exemption to deal with all this, so it is probably a moot point.