Tax return $$$ question

[JimH]

Well it's tax time. Since I have 4 kids and live in a constant state of poverty, I usually get a substantial amount of money back. I haven't filed for bk yet but need to ASAP because I'm flat broke and probably not too far from the bank starting foreclosure and getting my utilities shutoff. I was considering filing the end of the month so I could get the automatic stay but now I'm not sure what to do because of the $$$ that will be coming in.

Should I wait to file until after receiving the $$$? or just plan on losing it?

I am about 3 months behind on all bills - will be 4 months behind before the $$$ comes in. I would like to put the $$$ on the arrears for my child support, college loan, and my house. Is this a good idea to get the money and immediately use it where I want it used before the filing? Will I provoke the wrath of the trustee?

I read somewhere to keep the payments small - multiple checks. Is this a bunch of carp or really necessary?

I have eFiled and had it direct deposited before so I could get it sooner, but now I'm wondering if I should have it mailed to me so I can cash it out without it going through my checking acct. Is this a good idea or doesn't it matter? Or is it better to just get it sooner so I have more time to dispose of it?

[sunshine08]

Use your money to get things current you are keeping, (ie house or vehicle), pay to date your utilities, child support, student loans, etc. KEEP RECEIPTS where all this money goes. We got a substanial amount back. (it is listed on your filing) The trustee asked where the money went (weren't prepared for that question either, he hadn't asked anyone that ?) but I answered honestly and told him and I had the paper trail to back it up.
With 4 kids how can you not be broke???
I wrote "large" checks, homeowners insurance, property taxes, etc. ($600 & above), have this ready, even if not asked for it before the 341. I just looked in my checkbook, the trustee didn't seem to care.
We took copies of everything with us to the 341 meeting.
Hope this helps.

[JimH]

So it's ok to spend the money wisely? These are the ones I would like to clean up - and this the trustee would not take back from the lenders / utils?
child support $4,400
house $3,300
student loan $1,800
utils $1,000

[StaciMM]

You should be fine to pay those things. The child support is not dischargeable, would need to be paid anyhow. If you contat the student loan, you can probably work it out to put the past payments into forebearance (and once you file, they'll put you in deferment).

Utilities-your call. If you include them in the BK, you will have to pay a new deposit. Regardless, though, you should be ok if your refund is spent on needed items. Just don't take a cruise, LOL.

[JimH]

My student loan is already in forebearance. I still have the old paybook so I am considering playing stupid and paying them up to date. I would keep copies of the stubs and all. I will have a hard time spending all the money if I don't get creative. Also considered paying ahead maybe a month on the child support - Any idea if that would be a problem? The utils probably won't get paid unless I have to pay some to keep them from getting turned off before the automatic stay.

[StaciMM]

I'd pay the utilities before the student loan... If you include them in the BK, they will start billing you again from that point forward (only can discharge balance as of the day you file) and charge you a security deposit. Since you won't want to have spare cash on hand at the time you file, it might be hard to pay the deposit and in the end you could get disconnected and have an after BK collection.

On the other hand-after BK when you start repaying student loans, you should just be able to go back to making monthly payments. (That is what happened w/ my forebearance at least.)

[JimH]

Yeah, The only reason I want to pay up the student loan is because I can't discharge it but I can the utils. I'll have to plan for security deposits if I do it this way.

[JimH]

Staci, what do you think about paying ahead a month on the child support. By the 341 hearing I wouldn't be ahead anymore.

[StaciMM]

I have no idea on the child support... Not an area I've dealt with personally.

Perhaps for the utilities, call (anonymously) and ask about the deposit. If the deposit is less than the amount you're behind, it makes sense to discharge it if you're sure you can manage the deposit somehow.

You had mentioned that you are behind on your mortgage-do you plan to surrender the house eventually, or are you wanting to find a way to keep it?

[JimH]

I have no idea on the child support... Not an area I've dealt with personally.

Perhaps for the utilities, call (anonymously) and ask about the deposit. If the deposit is less than the amount you're behind, it makes sense to discharge it if you're sure you can manage the deposit somehow.

You had mentioned that you are behind on your mortgage-do you plan to surrender the house eventually, or are you wanting to find a way to keep it?

Most of my utilities already have a deposit because I've pushed my luck too far before. They probably won't lose much if I bk on them. I would have to put up another deposit which in the end I might be better off just paying them current. I have to look into that.

I want to keep my house. I may not have a choice though. In Ohio we're only allowed $5,000 in value. Making some rough estimates of value I think it would net a few thousand more than that. This is assuming realtor and closing costs would total 8%. I am not sure if I want to pay it current so that the missed interest payments will eat away at the extra value. Possibly making it less interesting for to the trustee to pursue.

[AAAArt]

Jim, You are scaring me a little. While it is wise and prudent to "plan" your Bk, you can get into a lot of trouble with some of your thinking, such as trying not to leave a peper trail w/ your tax refund. It is all well and good to use the money to pay legitimate expenses, however, one word of caution..."Never turn a financial problem into a legal problem."
You are prob. going to have to submit tax returns anyway, so be prepared to explain how you spent the money. Same with other issues. Please be careful that your planning doesn't turn into scheming which can cause you legal problems.
Yes, I know that the big CEO's put things in other people's names before their companies go Bk, but they also have big bucks for big time atty's and usually end up making some kind of settlement.
I know that it is difficult to give up some hard earned cash which you think you will need, but your future prospects sound very hopeful and you need to look at all of the debt you are getting out of and how much more peace of mind you will obtain. Being honest (without being stupid) will in the end wind up being rather cheap therapy.
Just my $.02, Best wishes, Art

[sobroke]

Well said AAAArt! Trust me Jim, I think that all of us at one point or another tried to figure out ways to get the "most of it", but when the words fraud and dismissal come into play, it really isn't worth it. I'm not saying that your expenses are legitimate, but be careful.

[JimH]

sobroke and art,

Thanks for the feedback. I don't want to do anything illegal that's why I'm asking for feedback. After the previous comments from others, I decided to have the returns direct deposited and will pay for everything by check. My situation is complicated anyways so I'm sure there is going to be trustee issues to begin with. If you read my other posts, you'll know what I mean.

[AAAArt]

Been there, schemed that (at least in my head) is how I know to give advice. Best wishes, Art