Question Will this BK wish ever fly? If so, when?

[mkuki]

Quick Breakdown...


Total Gross Salary $100K
Total Debt -- $200K (broken down below)
-> GA Condo: 115K (88K on 1st & 25K on Interest only HELOC) = ($800/month)
-> FL Timeshare: 11.5K ($250/month)
-> Car: 11.5K ($350/month)
-> CC (usa): 18K($800/month)
-> CC (canada): 16K ($500/month)
-> Student Loans (canada): 18K ($300/month)
-> Medical: 5K ($0/month)
-> Condo HOA: ($250/month
-> Timeshare HOA: (($100/month)
-> MA apartment ($1150/month)

Based on NOLO means test (MA is 96K for family of 4), I have a monthly deficit of $850/month.....so I was like BK, here I come...

Then yesterday I did my taxes and I have a total refund of $15K (Fed=11.5K; MA=2.4; GA=1.1)...aaarrrrrgHHHHH.....now I gotta figure out how to "hide" this money or spend it...

Should I delay the filing for another 7 months (assuming I am still employed), and tell all unsecured creditors to FUHCK! off?, while stringing along the mortgage holder with payments on 55th day delinquency?

Oh, BTW, do I stop paying the CU that holds the loan to the car...they are located in GA, which is like 1200 miles away...Ha! ha!

I'm getting a headache!!

[biotechsolution]

you also have to watch out because with a refund that large the trustee is going to back that 15k into your income. They may applly it to your income because of the large refund, having to much withheld to make the income mean.

I guess you plan on giving the up the GA condo and FL timeshare.
You won't be able to claim the timeshare in your means
test. I don't think the GA condo either, unless that's your primary
residence but then how would you claim the MA apartment.

You have a very interesting situation.

[Trixie007]

The tax refund can't be considered as income - the income that was taxed was already included. I've read that here on the forum and had it confirmed by a couple different attorneys.

I would caution the OP not to attempt to "hide" the refund though, you would just be buying yourself a lot of stress as you worry about being caught!

[fltoo]

True Trix. Refund is already in gross pay.

File taxes, spend refund on necessities for the family, save receipts, check your state for garnishment laws, don't put money in bank and pay bills with money orders, wait six months, file BK.

Rinse and repeat.

[mkuki]

thanks fltoo & trix

How about this....

- register a business (possibly Nevada LLC)
- open a business checking account
- dump the 15K into it
- wait for 6-8 months, then BOOM!! file BK

[mkuki]

or double up my federal exemptions for a vehicle and get a van (honda odyssey?) that will have depreciated to $6.5K by end of year

....Decisions, decisions....

[Never_Again]

thanks fltoo & trix

How about this....

- register a business (possibly Nevada LLC)
- open a business checking account
- dump the 15K into it
- wait for 6-8 months, then BOOM!! file BK

And this would help... how?

You are trying to hide an asset in the attempt to not have it taken under the laws that are allowing you to walk away from $200,000 in debt.

The Nevada LLC is still going to be owned by you, and therefore, an asset. It will not be looked at as a business, because it is not doing anything to make money.

The car exemption, if it can be done, is fine and completely acceptable within the law. That is only if it can be done legally.

I will give you the benefit of the doubt about the LLC, as maybe you weren't aware of just how fraudulent this sounds. I normally make it a practice not to answer questions on the forum that sound like someone just trying hide an asset, or do something underhanded.

The trustee views the refund as a savings account (which it essentially is, although a very poor one). It will not add to your income (it is already figured.)

I would encourage you, if you are unable to exempt this asset legally, to be prepared to surrender it. It is a small price to pay for discharging this much debt.

I would also adjust my withholding, so that I did not get a $15K refund in the future. That is over $1200 per month that you could have in your pocket to pay bills with. If you want to go blow $15K per year, set up an automatic savings plan in a savings account.

[fltoo]

I would always advise people to not do anything to skirt any issue in a BK.

You need to spend the money legitimately on necessities and be prepared to tell the trustee what you spent it on. Dentists, docs, any maintenance on car or house that you have been neglecting, etc.

[southernbelle]

The OP should keep it simple:

1. DO NOT attempt a clever scheme to hide the refund money. Spend it on legitimate things like rent, bills (you could pay insurance for the entire year without it being considered preferential), gas, buy an extra freezer and stock up on groceries, doctor's appts, your BK atty., tires, car/home repairs (do you need a new roof?), etc. You'll be surprised how quick you can spend it. AND KEEP YOUR RECEIPTS!!

2. Starting a "cover" business won't help you since you would have to provide receipts from the business and include it in your BK (even if you file a personal BK). Even if it's tied up in a business account, it's still your asset and the Trustee will ask for it. (They ask for statements from any open/current accounts anyway)

3. Seriously consider the car/van purchase if you can do it legally. But beware: I drive a honda and imports don't depreciate as quickly so be cautious with that one and stay within your exemption limits so you'll be able to keep it.

4. Put as much time between you and the refund as possible. I received my tax refund a couple of weeks before I filed and my Trustee asked for receipts to prove what I spent the money on at the 341. Luckily I had receipts and copies of money orders - organized and ready to go. I paid bills and my atty. That money was spent before I cashed the check. You are in a good position because you already have money to pay your atty and can file when you're ready and don't have to wait for a miracle refund check they were supposed to keep (like I did).

If you really need BK relief, be honest and keep everything on the up and up. If you are caught attempting to defraud the court, you could get into serious trouble and your BK case could get dismissed and you're back to square one. It's not worth the risk.

JMO anyway. Good Luck.

[StartingOver08]

thanks fltoo & trix

How about this....

- register a business (possibly Nevada LLC)
- open a business checking account
- dump the 15K into it
- wait for 6-8 months, then BOOM!! file BK

As the others have said, this will not work. Specifically the LLC is an asset of yours. All of your assets get turned over to the Trustee. The Trustee gets the funds from your LLC checking. Its that simple. Don't do it.

[biotechsolution]

The tax refund can't be considered as income - the income that was taxed was already included. I've read that here on the forum and had it confirmed by a couple different attorneys.

I would caution the OP not to attempt to "hide" the refund though, you would just be buying yourself a lot of stress as you worry about being caught!

but they will add the 15k into your ability to repay. adding an extra 1k per month into your schedules I and J. You can't max your withholdings to reduce your ability to repay.

[mkuki]

I would also adjust my withholding, so that I did not get a $15K refund in the future. That is over $1200 per month that you could have in your pocket to pay bills with. If you want to go blow $15K per year, set up an automatic savings plan in a savings account.

I knew this withholding issue would come up, but my withholdings (W4 is at 4) so where was I wrong?

Just to clarify why the refund is so huge...
-We did not get the 2007 stimulus (wifey did not have a SSN due to her legal status at the time)
-I did not work for 5 months in 2007 (and did not collect UI, again due to my legal status after job loss)
-I cashed out my 401K and the former employer kept all the withholdings (about 4K)
-I remodelled the GA condo with the idea of renting it out (spent $3K which I claim in the taxes)
-I relocated from GA to MA (which I claim)

so does this look fraudulent to the trustee i.e. I'm "withholding" too much to understate my take home pay?...I dont think so.

The whole idea of "hiding" it is coz I am pissed that money I could have used in 2008 is being looked at as income, hence all the scheming....LOL!

[fltoo]

Don't even think of hiding or scheming in preplanning BK. Will probably backfire and lessen your chances of being successful.

Call human resources and raise your w/h from 4 to 6 immediately. Put more money in your paycheck instead of giving Uncle Sam an interest free loan for a year.

[mkuki]

As the others have said, this will not work. Specifically the LLC is an asset of yours. All of your assets get turned over to the Trustee. The Trustee gets the funds from your LLC checking. Its that simple. Don't do it.

Well, if wifey is the sole owner (I just learned that Wyoming LLC does not disclose ownership), and she is NOT in ANY of my debt/assets declarations, then she will not be scrutinized.....ooh! just a thought...gimme your 2 cents...

[mkuki]

Call human resources and raise your w/h from 4 to 6 immediately. Put more money in your paycheck instead of giving Uncle Sam an interest free loan for a year.

fltoo....did you even read the posting just above your response?...I dont believe in giving uncle sam more than he deserves...