Filing ch7 on Tuesday, ? about our tax refund that is due any minute

[murphsmom]

Husband is filing chapter 7 on Tuesday, singularly. No assets, except we are expecting a 2009 ammended tax return refund of approximately $3500, which is due any day now to show up automatically in his checking account. It's been 6 1/2 weeks since we filed the return, and the normal turn around time is 6 - 8 weeks. So, clearly, this will most likely show up just after he files. We will NOT wait to file, we've been extending the filing date for months now, and we're just not going to wait any longer.

Attorney said 1/2 of the tax refund is mine, and if we get it before we file hub should immediately give me half, and spend down the rest on necessities (no prob there, mortgage is due).

But, I'm not sure what will happen if he files on Tuesday, and the refund comes afterward. Obviously, this will turn us into an Asset case, correct? Can he still immediately give me 1/2 of it out of his checking account, or should we "freeze" it, and wait and see what the trustee says?

[newbie2]

If your attorney is recommending "spending it down" it must mean that you can't claim it as an exemption. This is a bit confusing, because you state you have no assets, so isn't there an exemption somewhere you could use? Regardless, it sounds like your attorney is looking out for you and if you're not confident with his advice, then just hold on to it and do nothing until after your 341. Or ask your attorney for clarification about possibly exempting your husbands portion of it.

[justbroke]

Yes, please listen to your attorney. It is likely to be an asset, and I believe that is the reason your attorney instructed you to "spend it down". There are probably no exemptions left to cover it. If you receive it after you file, then it is likely that you will be an Asset Case (if you have no exemptions to cover it). You just lose that 50% of the refund. Nothing else really changes about your case, and it should discharge normally.

You may want to consider not spending the other 50% until your attorney gives you a really good walk through of what will happen. I'm not referencing any caselaw on this, but there are some greedy Trustees that will go after the entire refund (in a non-community property State) where the filing spouse works, but the non-filing spouse doesn't.

[murphsmom]

I think he may be able to exempt it using his wildcard. If not, then the trustee is welcome to 1/2 of it, I just want this over with. If he can give me half, then great, if not, then it's OK. But, we will listen to the attorney, and if needed, we won't touch it until after the 341.

Thanks