$13,000 gift to me a few weeks before filing

[BKDefender]

If that $13k check would cause you not to be able to file bankruptcy (i.e. too much income during the prior 6 months of filing BK) then you might consider asking your aunt to pay for your bankruptcy then give you the rest of the money after you file.

Alternatively, if you can cash the $13k check and it not affect your ability to file Chapter 7 BK you could cash the check, fund your 2009 Roth IRA with $5k, fund your 2010 Roth IRA with $5k, use the $3k for some living expenses and to file bankruptcy, then after your 341 meeting, withdraw the $10k (losing 10%/$1k for early withdrawal fees) and have $9k cash free and clear for your own use.

This is presuming that your state exempts IRAs/Roth IRAs/401(k)s like just about every state, if not every state already.

William

[doublestop1]

The whole notion of "waiting" until you're a few months into your plan makes me a little weary. But I'm glad to hear people discussing this. I filed in Oct and my case is coming up on March 15th. One of the things that's making me nervous is having little to no money around at the end of the month for unexpected problems. Even though my attorney built some buffer into my budget, it's still not enough to cover a big health expense, a major car repair, a house repair or larger business expenses (I'm self employed). I recently had a family member offer to give me a $5000 gift to leave in an emergency account, but after reading this thread, I'm hesitant to accept it. Even though I'd only be using it from time to time to cover unexpected emergency expenses, it sounds like I would legally need to disclose it to the Trustee...meaning that it could be at risk. I guess my question differs from that of the original poster. I'm already past my 341 meeting, etc. After you're filed and confirmed, how does the Trustee keep track of what you deposit...and whether or not you receive gifts like this? Do they monitor your bank accounts or conduct periodic audits?

[barbj]

If you do have extra cash that does not get exempted, who gets it? Would the secured creditor (ie 1st mortgage) get it all?

We have a truck worth about $20k paid in full. We are trying to sell it to buy something worth much less. What can we do with the extra money? I'd like to pay it to the mortgage.

We have $30k credit card, $57k HELOC, $416k mortgage. House is worth about $350k.

[justbroke]

The unsecured creditors are the beneficiaries of any liquidation of the non-exempt assets of the Estate. In other words, the credit card companies and other unsecured creditors. Since the IRS is a priority unsecured creditor, they may get first bite as well.

If you sell your truck in advance of filing, and put the money into your home, that may be an acceptable thing. However, I'd consult with a good bankruptcy or asset protection attorney to see if that's both a wise and acceptable thing to do in your State.

Since you say that you're already upside down on your home, that's probably not a wise thing to do.

[moonbeam9209]

So if you receive a tax refund of say...3000.00 and you spend it before filing.... do you have to explain where it all went to, or does it not matter because it was beforehand?

[BKDefender]

barbj:
If your house is upside down, I wouldn't suggest you try to pay-down your mortgage. Most states exempt IRAs, Roth-IRAs, and 401(k) accounts. With my clients who have excess money, I have them create a Roth-IRA and deposit up to $5k in their account, up to $5k into their spouse's account, and until tax day (4/15/10), they can do the same for their 2009 Roth-IRA account. i.e. they can take $20k today, save it in a Roth-IRA and keep it after BK. The trustee might not like it, but if they're exempt then they're exempt. You should check with a local BK attorney to see if the trustee's put up a fight about it.

moonbeam9209:

If you get a $3k tax refund and spend it completely before filing, I would recommend you keep the receipts and give copies of them to your BK attorney. If you used it to buy a 65" flat screen TV then the trustee could make you return it. If you used it to pay your car note, one month on your mortgage, buy groceries, etc, then you're fine.

--William

[moonbeam9209]

Thanks BK Defender. So far I have used it for tires, paying bills, car payment, Senior pictures, etc. Nothing too elaborate, but a lot of it went to little junk, like McDonalds, etc.

I did, however, have the refund put on a Turbo Tax Visa, so that I can print out a list from their website for what exactly I used it for. It is so hard to keep track of receipts for little stuff, although I was wondering if you need to keep all of those receipts, too. Do I just hand the trustee a big fat envelope of receipts, or do I have to itemize each one?

[BKDefender]

No, I don't provide the trustee with anything unless he/she asks for details on how the tax refund was spent.
If the debit card had a positive balance on the date of filing, it is a cash asset so I hope you did, or you will, disclose its balance as of the date of filing to the trustee as required by law in Schedule B 'personal property'.

William