Income tax checks and bankruptcy?

Question

I want to file bankruptcy in March of 08. I wouldnt file until after I cashed my income tax check so that I could pay to file. My question is, if I get a 5000 dollar income tax check, I spend a 1000 on the bankruptcy, do I get to keep the leftover 4000 and spend it on whatever I want? And what about the following years when I file my income tax, do they get taken as well? I would be filing a chapter 7 I believe. If thats the one that writes off your debts.

I live in Kansas

We are very young and the reason we get so much back is because we are very poor with 3 kids that are very young too. We can not afford to pay back all that we owe. If we tried to it would take years to do so. We cant afford an attorney to ask these questions.

Answer 1

I was advised by my bk attorney that there should be a $0 balance in my checking account for the week prior to the hearing. If you really need the refund in order to file, then do so.

I would check with your attorney on this.

Answer 2

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RE Income tax checks and bankruptcy?

I want to file bankruptcy in March of 08. I wouldnt file until after I cashed my income tax check so that I could pay to file. My question is, if I get a 5000 dollar income tax check, I spend a 1000 on the bankruptcy, do I get to keep the leftover 4000 and spend it on whatever I want? And what about the following years when I file my income tax, do they get taken as well? I would be filing a chapter 7 I believe. If thats the one that writes off your debts.

I live in Kansas

Answer 3

Typically the initial consultation with a bankruptcy attorney is free, and I am not familiar with Kansas exemptions, but the exemptions is what would determine how much of your tax refund you get to keep. In a chapter 7 the trustee is not interested in subsequent tax years, only the current tax years, and they always ask about tax refunds when it is tax refund time, but if you can claim the funds exempt and only spend it on necessities, you would be okay, but you really need to speak with a local bankruptcy attorney. They will know what will happen in your district better than anyone.

Keep in mind the current bankruptcy code requires you to provide the trustee with the past two tax years's tax returns (or return transcripts which show the exact same thing but prove that you filed), so they will be fully aware of your refund amount. Another answerer is write that the trustee will want to know where that money went. Do not spend it frivolously. And don't use ANY of it to pay unsecured creditors. It is okay to use it on SECURED debt though (but if you are as poor as you say I'm assuming you have no secured debt)

You can only file bankruptcy once every 8 years so be careful when you choose to file.

Answer 4

When you file, you will list all your assets. All other things being equal, you will show either $4000 of cash or $4000 of soething else. Either way, you will not keep them.

If you do not list everything, you are taking a huge chance-- it's called fraud.

Good luck.

PS: I suggest that you search your soul. By bankrupting you are going to leave some people high and dry. I'm sure you think that it's just banks and corporations, but I guarantee you there will be a few small businesses too. You are stiffing these guys. There might even be friends and family involved.

SHAME ON YOU for looking to the future with a sense of entitlement. You are setting yourself up to bankrupt again. Did you know that you can only BK once in 10 years?

I urge you to get some help. You have some serious emotional/psychological issues around money. I would prepay a professional for as far ahead as the $4000 would go. Or useit for tuition to a vocational school. The judge might not require you to get that money back ( if it can be gotten back at all)

Young and poor? Young will fix itself. Poor can only be fixed with effort and education. Whatever your situation, you can better yourself only if you don't stay stuck in self-pity and entitlement.

Answer 5

Laws are much tougher on filing bankruptcy. It may not be as easy as you think. You should really seek advice from your attorney.

Unfortunately, you will probably need to hire a good attorney to properly file. Sorry - but if you want to do it right, you might want to set aside some of that $5,000 for an attorney, as if you don't get it done properly, creditors can still harass you.

Just remember, "you get what you pay for." If you skimp on the way you go about this, you might not be able to wipe as much of your debt off as you think.

Answer 6

I don't know how RECEIVING a tax refund is treated by your bankruptcy. What I DO know is that legally it doesn't matter if you cash the check or not.

Answer 7

Ask your lawyer, but the judge might want to see your recent tax return or two - if he sees you got $5000 he's going to want to know what you did with it, and if you just spent in on whatever you wanted to rather than using most of it toward your debts, that might affect whether you're allowed to wipe out your debts or not. Not a wise move.