Another chapter 7 question

[DYLAN150]

My neighbor should receive his chapter 7 discharge this next week or two. No where in his bankruptcy does it mention his tax return so is he free to spend that? He needs to buy a car, so would that be ok to do? He is just waiting for the discharge order.

[Dorsey]

I would call the Trustee and ask. The Trustee is technically the owner of all debtor property, but if it's cash sitting is his checking account I can't imagine that it would be a problem. I know from speaking to my Trustee early on that converting property prior to the 341 hearing is a huge no-no. But it sounds like this is cash sitting in his account and as far as I know it's available for living expenses. Of course, the Trustee should already know about the tax refund because it's required to be disclosed on Form 7. Also, he was required to send a copy of his most recent tax return to the Trustee.

[daylate]

Did he get a no asset/no distribution report? If he did he's probably ok, but to be safe he should just wait the week or two until discharge.

[tobee43]

i would tell your neighbor to ask the atty that handled the case.

we were told immediately to file and spend it asap.....we had a HUGE return..it was never mentioned at the 341 nor prior...our trustee's office had numerous questions prior to our 341, not a one to do with our tax refund for the year.

i'm going out on a limb on this one, if there was no mention prior to, during, or after the receipt of the order of discharge and the order of the close of the case by the trustee...you should be good to spend it.


oned, however, wants so to see that actual court order referring to the no asset distribution and a release of the estate by the trustee. that order means the trustee is done with it.

[Dorsey]

we were told immediately to file and spend it asap.....we had a HUGE return..it was never mentioned at the 341 nor prior...our trustee's office had numerous questions prior to our 341, not a one to do with our tax refund for the year.

Just to be clear, tax returns should be disclosed on Form 7, Item 2 and the Trustee should be aware of them. If you know the refund is coming before the closing date, I believe you have a legal obligation to amend your forms.

[DYLAN150]

Tax return is 1500 bucks. When he filed he didn't no how much he was going to get back. He had to pay last year. Yes, the trustee issued a notice of no assets and in the next 10 days the case should be over. But this brings up an interesting point, how much money can you save up in your account after the 341 meeting? Can you legally purchased a car after the 341 meeting without the trustee's approval. (chapter 7)

[Dorsey]

how much money can you save up in your account after the 341 meeting? Can you legally purchased a car after the 341 meeting without the trustee's approval. (chapter 7)

My understanding is that you are free to do anything you wish with assets that you acquire after filing (i.e. wages, etc.). The only assets that are part of the estate are those that existed on the date of filing (or prior to the filing date in the case where you gave a creditor unfair benefit by paying him to the detriment of other creditors). If three months later you earn a paycheck for work done after filing, that money is yours and is not part of the bankruptcy. I have read through NOLA's books that you can take a loan, etc. after filing too.

[tobee43]

My understanding is that you are free to do anything you wish with assets that you acquire after filing (i.e. wages, etc.). The only assets that are part of the estate are those that existed on the date of filing (or prior to the filing date in the case where you gave a creditor unfair benefit by paying him to the detriment of other creditors). If three months later you earn a paycheck for work done after filing, that money is yours and is not part of the bankruptcy. I have read through NOLA's books that you can take a loan, etc. after filing too.

my understanding as well. and, as you pointed out as long as you have disclosed everything on your peitition, people say it's a "snapshot" at one's time of filing. i think that may be a good way to express it.

however, as much as i have experienced and as much as i have heard on this forum, the bottom line will be how the trustee will handle one's case. i have heard some very odd stories!!

just a note dorsey, of course there was complete disclosure on our behalf. one always has an extremely difficult time backing up lies..while the truth always floats to the top and is much easier to prove.

[daylate]

Tax return is 1500 bucks. When he filed he didn't no how much he was going to get back. He had to pay last year. Yes, the trustee issued a notice of no assets and in the next 10 days the case should be over. But this brings up an interesting point, how much money can you save up in your account after the 341 meeting? Can you legally purchased a car after the 341 meeting without the trustee's approval. (chapter 7)

To me it appears that he didn't disclose he was getting a refund-reason not being important-I think that if it wasn't disclosed it could be a problem if discovered-will it be discovered? who knows?

I would agree with the others that said you can save up as much as you'd like of money earned after filing and can be spent as you desired.