Can I accept money from a relative?

[debtsucks]

I did a search and I am not quite sure how to word it. My Dad and Step Mom want to give my husband and I about 2,500 so we can use that along with our tax refund to get a place to live. The money will be spent on first months rent, security deposit, rental truck, groceries to stock the house, and any deposits needed for the utility companies. They don't want us to pay them back. We aren't filing until hopefully May/June. Would it be okay to accept this one time gift or is it a red flag with the trustee?

[keepmine]

Nothing in the bk code says you can't get help from family.
If the gift mjght affect your means test, I'd ask them to write checks directly to the apt. complex, utility company,etc. HAve'em buy you a gift card to use at Kroger or wherever.

[ryan]

Nothing in the bk code says you can't get help from family.
If the gift mjght affect your means test, I'd ask them to write checks directly to the apt. complex, utility company,etc. HAve'em buy you a gift card to use at Kroger or wherever.

Just to follow up on this, what if the amount wouldn't affect the means test, but would not be fully covered by the allowed exemption?

Then it would be subject to the trustee taking for creditors, correct?

[BCA2009]

Just to follow up on this, what if the amount wouldn't affect the means test, but would not be fully covered by the allowed exemption?

Then it would be subject to the trustee taking for creditors, correct?

Not if it was spent on necessary items before filing. You just don't want the cash on hand as of the filing date.

[keepmine]

Not if it was spent on necessary items before filing. You just don't want the cash on hand as of the filing date.

Exactly! You don't want cash on hand in excess of what your state exempts when you file. Spend it down.

[robertg]

Have your family cut the checks directly and it shouldn't be an issue.

Hope that helps,
Robert G
[Active advertsing link removed. Against forum rules.]

[BKDefender]

I know you don't want to hear this, but if your relatives pay a bill on your behalf that you would have had to pay yourself, then it is income. It's not taxable income if it is less than $12k per person-to-person as a gift, but it is income. Whether you report it is your choice, but if not reporting it qualifies you for Chapter 7 whereas reporting it means you don't qualify, then by not reporting it you are risking the loss of your discharge if the trustee finds out about the gift while reviewing your bank account statements.

--William

[debtsucks]

We qualify for ch7 even with that. We are under the median income by about 30,000.

[AngelinaCatHub]

We qualify for ch7 even with that. We are under the median income by about 30,000.

On what 'BKdefender' states, is there any way you can file first? Also, I can't see that a gift is not a gift but income. They do not wish it back. What is family for? I cannot see the law to be that harsh. But what do I know? If I were smart, would I be bk? LOL. 'Hub

[SleeplessMI]

What BKdefender says is also what my attorney told me when I said my boyfriend is covering my car payment now and then. Cash or check, doesn't matter. Paid directly to the creditor or deposited in my own account, doesn't matter. Gift, doesn't matter--if it's more than a token amount (say, $50 birthday gift), it's income.

[debtsucks]

So if that one time gift of 2,000 or so is considered as income then is it just added to whatever your yearly income is. So instead of making 50,000 a year it becomes 52,000???

[SleeplessMI]

Debtsucks--yes, that's what my lawyer told me. Just to clarify, this is for purposes of the means test to make sure I qualify for a Chapter 7, which is a separate issue from assets at the time of filing. If you spend the $2,000 on allowable expenses before you file, you don't have to either turn it over to the trustee or exempt it, but it still counts in your income calculation for the means test if you received it in the six-month lookback period.

I disclosed to my attorney that my boyfriend paid me $326 last month so I could make my car payment on time, even though he paid me in cash and I handed the bills to my lender through the teller window. Otherwise, the trustee might say, "I see you paid your car payment, but I don't see enough money in your income statement to cover it, so where did the money come from?" Then it's bye-bye bankruptcy.

You say you're $30,000 below the median, so you're probably safe. Just keep in mind what the gurus on this board have said repeatedly: the median is an indicator but not determinative that you qualify for a Chapter 7. The determining factor is whether you have approx. $150 a month or more of disposable monthly income for a Chapter 13 plan based on your income during the six-month lookback period for the means test. I believe that regular income is also a factor but will wait for a guru to chime in on that question.

[BCA2009]

I know you don't want to hear this, but if your relatives pay a bill on your behalf that you would have had to pay yourself, then it is income. It's not taxable income if it is less than $12k per person-to-person as a gift, but it is income. Whether you report it is your choice, but if not reporting it qualifies you for Chapter 7 whereas reporting it means you don't qualify, then by not reporting it you are risking the loss of your discharge if the trustee finds out about the gift while reviewing your bank account statements.

--William

It might be considered income for BK purposes. I don't know the rules on that. But gifts from family members are not income to the recipient under IRS rules. There could be gift tax issues to the person giving the gift, but not to the one receiving the gift.

If there is expected consideration in exchange for the gift, then it would be taxable.

[forgotten]

So if that one time gift of 2,000 or so is considered as income then is it just added to whatever your yearly income is. So instead of making 50,000 a year it becomes 52,000???

It would actually be 54,000... since its your last 6 months income x 2 for the means test.

Just like if you made $30,000 in the last 6 months, then withdrew $20,000 out of your 401k your yearly income is now 100,000/year for the means test.

[JEM]

It would actually be 54,000... since its your last 6 months income x 2 for the means test.

Just like if you made $30,000 in the last 6 months, then withdrew $20,000 out of your 401k your yearly income is now 100,000/year for the means test.

Isn't that artificially inflating income? Wouldn't that assume their parents would give them $2000 every 6 months?

I'm so confused.