$6000 Tax Refund

[lillaimof2kids]

Last year we filed our taxes before we filed BK7. Our tax return was spent on teeth cleaning for the kids, new glasses for my husband and daughter, 1/3 side of beef, stocked up on food at Sam's club/grocery, a couple mortgage payments, caught up on all bills we were behind on (electric, gas, phone...no CC's or anything like that), a couple outifts for the kids, 2 health insurance premium payments, auto oil changes. It was all things we needed. None of the money was wasted on questionable stuff. I talked to my attorney before we spent a penny. I saved receipts for everything!! We didn't file until all the money was spent.

[yeahdischarged]

Oh, I'm sorry - definitely not a puppy hater. Have 2 dogs myself. I thought you said you would buy puppies. That is just definitely not something that is a necessity. But vet bills, checkups - absolutely. We are allowed to keep our pets healthy! So many of us spent literally years struggling before we finally filed, so think hard - what have you put off? Dental, medical, eyecare, automotive, legitimate home repairs (not basement remodels), car tires, gosh it's hard to think now, but what have you not even considered while you were trying to make it day by day? That's the kind of stuff you are allowed to do.

Sometimes I guess I do come off blunt, we went through the wringer and back with our experience. Anything I can do to help you avoid that I am willing to do. Rather you hear something you don't like from one of us "survivors' than from a Trustee in a negative situation!! lol We all mean well, trust me, or we wouldn't spend time here after our discharge. The emotional support and advice I got here and other boards is the only thing that kept me sane while we were going through it.

My lawyer told me that in some districts, it is a given that the trustee will take your tax return ( period) and in others, they never take it. So it helps to have a knowledgeable attorney who has a good relationship with the Trustee's in your district.

Either think like a Trustee, check with your attorney, or better yet - both! lol

Good luck everyone!!

[okiemom2008]

would paying off a private student loan be considered peferential payment?

Since we are giving up our only vehicle in bk--would buying a new one be a good thing to spend refund on our would they just take it?

[naturegirlny]

This answered a question I had, I am considering filing and speak to a lawyer on Friday. I get my return on the 30th but there are things I need and my kids need. If I file will they want to see reciepts for what I bought with my income tax return?

[Tbornetun]

Save all the receipts, that is your best bet. They may and probably will ask to see them.

[JoeBankrupt33]

In Colorado, you can exempt "The full amount of any federal or state income tax refund attributed to an earned income tax credit or a child tax credit."

In NOLO, it didn't mention child tax credit (only eic listed under public assitance), so I'm glad that I looked at the Colorado Revised Statutes too!

I'm not saying that this helps you, but often, people who are getting that much back have kids or earned income tax credit.

I have 4 kids, so I'm pretty sure that I could exempt $4000 from my tax return (unfortunately, I'm not getting even close to that).

[woeisme]

would paying off a private student loan be considered peferential payment?

Since we are giving up our only vehicle in bk--would buying a new one be a good thing to spend refund on our would they just take it?

Yes, paying any loan off is preferential payments, and if it's for over $600 the trustee will go after it, take the money back off the private student loan service and distribute the payment to all your creditors.

As to buying a new vehicle, just be sure to check out your state's limits on vehicle exemptions. Here in Ohio it's a paltry $1000 (or maybe it was $1500, I just remember it was very tiny). So spend $6000 on a car, you will have to pay the trustee any amount over your state's exemption. So maybe use it for a down payment on a car, but don't put in any more $ than you can exempt.

[okiemom2008]

Yes, paying any loan off is preferential payments, and if it's for over $600 the trustee will go after it, take the money back off the private student loan service and distribute the payment to all your creditors.

As to buying a new vehicle, just be sure to check out your state's limits on vehicle exemptions. Here in Ohio it's a paltry $1000 (or maybe it was $1500, I just remember it was very tiny). So spend $6000 on a car, you will have to pay the trustee any amount over your state's exemption. So maybe use it for a down payment on a car, but don't put in any more $ than you can exempt.

I have checked Texas vehicle exemptions and from what I can tell we have 60k we can exempt in whatever we wanted.

[sunflowers]

Would this work??

My husband and I are going to use our tax refund to file but my main question is how to make sure we spend our refund wisely.

I was told to spend it before filing and we are but I am wondering if buying my kids new beds would be okay. I am pretty sure for my one son, who is 3 and still in a toddler bed with a crib matress purchasing a new bed would be fine. But my other son who is almost 11 needs a new bed and matress as well and that is what I am having a hard time with.

Any comments on this? We live in Indiana.

[BKDefender]

It has been mentioned before, but if you file bankruptcy during January through March, you can fund your last year's Roth IRA up to the $5k/year max AND fund this year's Roth IRA up to the $5k/yr max. So if you have $4,900 then fund a 2009 Roth IRA for you, presuming your jurisdiction exempts IRAs. Then just file a few days or a week afterwards.

--William

[mommy2lulu]

Sunflowers, we are buying a bed for our 2 year old with our refund. The lawyer said to keep it inexpensive, if we spend $1000 to buy a princess bedroom set for a 2 year old, the trustee will not be happy and most likely say that he can allow $100 or whatever for a simple bed, but that we have to pay the rest back. Just think "needs," and err on the side of caution, and you should be okay. If your 11 year old NEEDS a bed, then you should probably do it, but just be realistic with how much you spend. And keep receipts!!!

We got back 5k today (woo-hoo!), paying 1300 to the lawyer, and using the rest for car repairs (120K tuneups and new brakes for both cars, and 2 new tires for one of them), dental work for us both, a bed and possibly a dresser for our daughter (from Ikea, el cheapo!), groceries, and buying the remaining 3 online classes that my husband needs to take so he can graduate in July. I might ask the lawyer if I can get prescription sunglasses. I need them sooooo bad, but I worry that it will look extravagent.

It is so tempting to go on a shopping spree, but the lawyer said that is exactly what the trustee doesn't want to see. We are planning to file Mar 1, but may extend that out if the refund isn't spend yet. It is BLOWING my mind to see almost 6k in our checking account right now!!!

[nc73]

6k refund? You want to declare bankruptcy? I'm gonna keep quiet on this one.

[newbie2]

6k refund? You want to declare bankruptcy? I'm gonna keep quiet on this one.

Please don't be judgmental. $6000 doesn't go as far as it used to do. Paying for attorney fees, things a person couldn't do while paying just the minimums on credit cards (medical, dental, auto repairs, etc). Having $6000 in the bank does not mean that someone shouldn't try to better their financial house and long term outlook by declaring bankruptcy.

[Overmihead]

Please don't be judgmental. $6000 doesn't go as far as it used to do. Paying for attorney fees, things a person couldn't do while paying just the minimums on credit cards (medical, dental, auto repairs, etc). Having $6000 in the bank does not mean that someone shouldn't try to better their financial house and long term outlook by declaring bankruptcy.

Well said. Ours will be in this range (first time ever for a refund this large), but then when we start listing everything we have had to put off....well, it will be very easy for us to spend it on legitimate, very-overdue expenses.......dental visits/teeth cleaning, some school clothes for the kids, having the septic tank pumped out, major tune-ups/repairs/tires for our vehicles that both have over 150K miles, one of our kiddos needs braces, our dishwasher has been blinking all the lights at us and working when it wants to, stocking the pantry.....and then of course, the attorney fees. We won't even be able to cover all of this, we'll just have to prioritize. Point being, a $6,000 tax return is no indication of whether or not a person needs to file BK.

[mommy2lulu]

We have never got back more than 1500 tax refund, so I was in total shock when the accountant told me how much we were getting. There were so many credits that we were eligable for that I didn't even know existed. If we would have got the 5k in November when we decided that we were going to quit paying minimums on our ccs and file bk within a few months, then maybe we could have paid off a couple smaller ccs, and maybe we wouldn't have decided to file. But since we quit paying cards months ago, if we used that 5k to pay down our debt now, we would be exactly where we were in November again with all the fees and rate jumps. Yeah 6k is a lot of money, but put towards our debt, its like spitting on a fire and just prolonging the inevitable.