My Maine exemptions and issues

[Daedalus81]

In Maine we are allowed a $400 wildcard - filing jointly we'll have a total of $800. Since Maine offers no protection for wages or money in the bank I presume i'll have to use that to cover cash to survive on. What I don't understand is while i'm getting payed after filing do I somehow have to keep my back account to $800 or less?

We also don't expect much extra on our tax refund (last year we got $37), but we do have another child. We are in need of heating oil pretty badly. Would it be frowned upon if I used my return to buy oil when the oil is exempted?

[SMinGA2]

Generally speaking - your filing is a snapshot of your assets as of the date you file. If you file your tax returns and receive/spend your refund before you file your bankruptcy, it will not be an asset. If you file your bankruptcy before you receive your refund, then it is an asset. Also any cash that you have and/or money you're owed when you file = assets.

Spending money on reasonable living expenses should not be a problem.

[sbatman]

Please! Buy the oil! Ain't no one who's gonna fuss about that. My sister lives in Bangor and has a oil boiler, a pellet stove, a wood burning stove and a propane heater. I was talking to her yesterday and she says she spends $3500 a year just for heat. Big house, 4 kids and she likes it warm-we grew up in Florida.

I admire you Mainiacs!

[Daedalus81]

Please! Buy the oil! Ain't no one who's gonna fuss about that. My sister lives in Bangor and has a oil boiler, a pellet stove, a wood burning stove and a propane heater. I was talking to her yesterday and she says she spends $3500 a year just for heat. Big house, 4 kids and she likes it warm-we grew up in Florida.

I admire you Mainiacs!

I appreciate the sentiment! I hope your sister's family is staying warm! It has been decidedly cold the last couple weeks.

On a slightly related issue...

My mother-in-law also bought a new fridge and stove (the old ones were defunct) for each floor of the house (duplex) and she will be living with us soon, but technically they weren't gifted. Should I note them as an asset? Should I pay her back? Will paying her back cause issues as preferential treatment?

[Daedalus81]

I guess overall the potential for a tax refund is causing me a lot of headaches. I have so many things I could use it for to get squared away, but i'm not certain all of it is "proper" (appliances from my mother in law, car in need of serious repair, etc). So if file it before my BK then I have to figure out what to do with it. If i wait until after my 341 meeting and they ask for it would I be able to use some it of it buy oil, fix my car, and the forfeit the rest?

[dina13]

I think concerning fridges and stoves bought by your MIL, aren't they technically her assets? If so, when you fill out petition, there is a question whether there are any items on your premises that don't belong to you - and you could include them. When we were filing, I answered the same question listing my mother's grill that we keep in our backyard, and two bookcases of books that she lent me.
Concerning tax refund, it's probably the safest to first receive it and spend it on car repair, oil, etc. - necessities - keeping all the receipts, and then to file bk. However, definitely double check that with attorney.

[LadyInTheRed]

So if file it before my BK then I have to figure out what to do with it. If i wait until after my 341 meeting and they ask for it would I be able to use some it of it buy oil, fix my car, and the forfeit the rest?

It doesn't matter when you file your tax return. Your 2012 refund is an asset right now. If you don't receive it and spend it before you file BK, you have to report it as an asset and turn over any non-exempt portion to the trustee. If heating oil is exempt in your state, that sounds like an excellent thing to spend the refund on. You can also use it to pay attorney fees. Or, as dina13 suggests, on car repairs or other necessities. How long has it been since you put new tires on your car?

Also, you say you will get paid right after you file BK. Keep in mind that earned but unpaid wages is also an asset. It may be better to get paid, go grocery shopping, pay your mortgage/rent and all of your bills with cash or cashiers check and then file BK within a day or 2 of getting paid.

In addition to the wildcard, it looks like you may have additional wildcard available if you don't need other exemptions:

Unused portion of exemption in homestead to $6,000; or unused exemption in animals, crops, musical instruments, books, clothing, furnishings, household goods, appliances, tools of the trade, & personal injury recoveries
Me. Rev. Stat. Ann. tit. 14, § 4422 (15)

http://www.legalconsumer.com/bankruptcy/bankruptcy-law.php?ST=ME#other

ETA: Read the actual law regarding the above-quoted exemption and/or discuss it with your attorney. There's a link to the law on the above page. I don't think the exemption is really as described in that you can't use unused exemptions for animials, crops, etc. Instead, that is a list of things you can use $6,000 of unused homestead exemption on. So, it's not really a wildcard. It is an increase of other exemptions.

[Daedalus81]

ETA: Read the actual law regarding the above-quoted exemption and/or discuss it with your attorney. There's a link to the law on the above page. I don't think the exemption is really as described in that you can't use unused exemptions for animials, crops, etc. Instead, that is a list of things you can use $6,000 of unused homestead exemption on. So, it's not really a wildcard. It is an increase of other exemptions.

Right - initially I had read it in that i'd have $6,000 to exempt whatever I wanted and I was happy, but then I poked around and found that is just extends the other specific sections (The debtor's interest, equal to any unused amount of the exemption provided under subsection 1 but not exceeding $6,000, in any property exempt under subsections 3 and 5 and subsection 14, paragraph D). Such is life!

I appreciate the help as always!

[Pandora]

"It doesn't matter when you file your tax return. Your 2012 refund is an asset right now. If you don't receive it and spend it before you file BK, you have to report it as an asset and turn over any non-exempt portion to the trustee...."

LITR hit it right....you'll have to report it.

As to your bank account - she's also correct; our attorney told us to spend it down as we were able (for bills, food, etc) PRIOR to filing and again prior to our 341 hearing. We were asked by trustee to provide banking statements the day before our 341 (YMMV of course depending on your trustee) - because it would be counted as an asset. Plan filing date carefully and not on a payday....Be sure to keep records of where it all went.... you will probably be asked.

our lawyers advice: take out any money you need to so its not taken... have your checking account as low as possible and ensure ALL DEBITS / CHECKS are cleared prior to 341.

[Daedalus81]

I do have one more item I want to clarify. We need to wait on an amended W2 and a 1099-R to finish filing our taxes. So, we don't know how much the asset is worth. If I do get a refund *after* my 341 meeting and use part of it to buy oil and forfeit the rest - is that ok?

[LadyInTheRed]

I do have one more item I want to clarify. We need to wait on an amended W2 and a 1099-R to finish filing our taxes. So, we don't know how much the asset is worth. If I do get a refund *after* my 341 meeting and use part of it to buy oil and forfeit the rest - is that ok?

Not if the refund isn't exempt. If you don't know the amount of the refund at the time you file, you list it on your petition and estimate the amount. Even if you thought you were not getting a refund and found out after your 341 (or even after discharge) that you are going to get a refund and you have no exemption available, the trustee can take the refund.

Anything that you are entitled to on the day you file BK that you don't exempt is an asset of the BK estate. It doesn't matter that you don't know you are entitled to it or don't know the exact amount to which you are entitled.

[Daedalus81]

Ok i'm almost done - I promise!

If i get my refund now and buy oil with it - does the portion I used to buy oil count as income on my means test? I have found sources that say no and the attorney I spoke to sounds less than confident (unfortunately there are very few around here that I can find).

[Daedalus81]

Alright I found it from a reputable source (NOLO Ch 7 book). Sorry for the hassle!