filing Bankruptcy & tax returns

[sheilaE]

My husband and I are both in our early 50's and have 3 children still living at home. We have yet to meet with a lawyer, but hope to within the next 2 weeks. I'm not sure if we need to file 7 or file 13-but we definitely want to hold on to our home. We have about 50,000.00 in cc debt and also a 2nd to 50,000.00. We stopped making cc payments as of January-now the calls from all our creditors have begun. The phone rings constantly from 8a.m. until 9p.m.

We will be getting back a tax refund this year, so when we file our taxes-will our creditors be able to legally take our refund? It should be around $6000.00 which would be a nice savings for us-being we have none. We have been living paycheck to paycheck for the last few years. I would like to put our refund into a savings because I know car repairs are just around the corner and it would just be nice to know we had cash for any emergency that may come up. We've used cc for all emergencies in the past.


Thanks for any advice!

[blessed]

Meet with a couple attorneys and retain the one you like best. We were able to keep our refund but it was only $1900 and $1100 of it went to pay the attorney fees.

I sure wouldn't spend any of it until you talk to an attorney. Good luck!

[OutofTime]

It depends on your state and exemptions you can use. I'm a no asset case and was told by a couple helpful members here along with the attorneys i've consulted with that in CA, I have a $20k wildcard exemption so my 5k refund is safe. If you can't cover or protect it, then it's time to spend it on groceries and pay off your insurance on autos and home if applicable because they can't take those from you as they are seen as expenses needed for daily living.

[sheilaE]

That make perfect sense. It would feel wonderful to get caught up on or even pay extra on utilities, cable bill, and phone bill. Thanks!

[blessed]

I should have specified when I said I wouldn't spend it. Spending it on living expenses is okay, spending it on luxury items like a shopping spree is not. (Not that I thought you would do that, I've been reading too much today lol)

[sheilaE]

Ya, I figured I couldn't do that-but I can't tell you how much I would LOVE to do that! We haven't bought or done anything fun in such a long time-now we're going to get a decent tax return and I'm afraid we'll have it taken from us. If I could just put $1000.00 in savings I'd be so happy.

[OutofTime]

oh btw, welcome to the forums sheilaE, I am still new here myself but have much more information now from when I first started. I too is in the same situation where we haven't done anything "fun" but its the price I pay for living out of my means for the last 3-4 years and being unemployed for 8 months.

[SMinGA]

Just wanted to add: buying things you need (but have been putting off in recent months/years due to lack of funds) is not the same as luxury spending. Buying kids clothes, getting eye exams/glasses, car repairs, etc. are all ok just for a few examples.

If your home value is less than the balance of your 2nd mortgage, you can probably do a ch. 13 and have the 2nd 'stripped' to count it along with your unsecured credit card debt. If that is your situation, you don't have home equity to exempt you may be able to exempt some cash on hand. Just depends on your state exemptions.

[sheilaE]

I'm jumping around here, but I have another question:

Say when we get our tax return we use it to get current on all our delinquent bills (2 Discover cards, Citibank, Nat'l City visa, WFB visa, Chase, Dell) Getting current on our cc bills would use about $2700.00 of the return. With the rest of the return we would be able to stay on top of them for about 4 months.

Or say we get our return-and then file bankruptcy. Isn't that going to look really bad having all that money-even though we haven't spent it? Won't we be asked how come we didn't use it to pay our bills?

Also-I can't tell you how much this site has helped me. I've been worried and having so many sleepless nights worrying. Once I found this site it helped me to feel normal. Everyone is soooooo nice!
Thanks!!!