spending tax refund

[Trixie007]

Well, yes there is a difference if the gift card cannot be redeemed for cash. The terms on the card are quite clear. Can the trustee use his magical trustee super-powers to undo the purchase and get cash back? The above scenario (thousands of dollars in grocery store gift card purchases) would be obvious fraud...how would that be handled?

In our eyes there may be a difference, but in the Trustee's eyes, there is not. Never mind what it says on the card - the holder of the card can redeem it for the value of the card by purchasing products, it is an asset on hand when you file. Many people on here have said that their lawyers (who have real world experience with this) have told them this is a no-no and that the trustee does view gift cards as an asset. If purchasing thousands of dollars in the gift cards would be obvious fraud, why wouldn't purchasing $50 worth?

The trustee could handle this any way they deem necessary, such as making you pay cash to them for the value of the card...

Obviously, everyone filing is going to have to decide what to do for themselves as they get closer to filing, but on this forum the rules are clear about not giving advice on how to perpetuate fraud in BK - and posting mental run-arounds here about why this would be okay for someone to do could be confusing to people who are trying to figure out what is okay and what is not.

[mysterie91]

Our attorney gave us a long list of things that were OK and a list of things the trustee would question.

Things we purchased were things you will always need and won't go bad - toilet paper, paper towels, kleenex, mop and bucket, cleaning supplies, maxi pads, diapers, wipes, a few OTC meds, tires for the car...things like that.

She was VERY specific and did say that gift cards are a no-no becuase they are a cash-equivalent. The trustee would take them. Also vacations or anything "frivelous" were out. The money had to spent on necessities - things that you would have to expend cash for no matter what.

[OhioFiler]

What could you get for them at a yard sale? I'd pay you 80 cents on the dollar for valid gift cards.

The trustee could find a market for them and convert them to cash for debt payment.

[2Bshinyandnew]

It's funny here but the Trustee is emotionless. He/she merely looks at assets and doesn't care whether it's cash or Chuckie Cheese tokens. If he can redeem it for money to pay the creditors he will.

That was my point, most of these gift cards CANNOT be redeemed for cash. What is the trustee going to do, send Citibank a $100 grocery store gift card as payment from a debtors estate? The trustee wants assets that can be liquidated to cash, right? It says right on a Publix gift card (my local big chain), "This gift card cannot be redeemed for cash". If it cannot be redeemed for cash, does the trustee get to pocket it? Will he auction it off? Will he turn the $100 card in for 10 $10 cards to send to 10 creditors? Will he put it on craigslist for $80? Is there some sort of Gift Card redemption company out there to handle this? I'm being sarcastic (sort of).

Anyone have any real word experience with this, not just speculation? Now I'm curious.

There's no difference between a gift card and cash in hand in the case of BK. Otherwise, anyone with thousands of dollars in-nonexempt cash could just buy gift cards and keep all their assets.

Well, yes there is a difference if the gift card cannot be redeemed for cash. The terms on the card are quite clear. Can the trustee use his magical trustee super-powers to undo the purchase and get cash back? The above scenario (thousands of dollars in grocery store gift card purchases) would be obvious fraud...how would that be handled?

[OhioFiler]

ROFLMAO!! This made me chuckle! Imagine showing up to your 341 and handing over $500 in Safeway or Publix gift cards to the trustee??!! Once puchased, they have no cash value...how would this "asset" be distributed to any creditors??? I dunno, this just made me giggle

It's funny here but the Trustee is emotionless. He/she merely looks at assets and doesn't care whether it's cash or Chuckie Cheese tokens. If he can redeem it for money to pay the creditors he will.

[Trixie007]

ROFLMAO!! This made me chuckle! Imagine showing up to your 341 and handing over $500 in Safeway or Publix gift cards to the trustee??!! Once puchased, they have no cash value...how would this "asset" be distributed to any creditors??? I dunno, this just made me giggle

There's no difference between a gift card and cash in hand in the case of BK. Otherwise, anyone with thousands of dollars in-nonexempt cash could just buy gift cards and keep all their assets.

[willbfree]

Okiemom2008 you need to check with someone in your own state but in AZ our bk attorney says we can spend our tax refund on $750 debit cards from a grocery store to save for the bk process. Your state may allow more or less but the answer is yes you can. Our attorney also stated that Costco and Sam's were out. They have too much nonfood inventory and to stick to true grocery stores like Kroger's, Fry's, Albertson's, etc. She also said we could take a vacation with that tax refund money (yeah right) but it's a legit use of the tax refund if you can't find anything else. Just make sure and keep all receipts to prove where the money was spent.

[2Bshinyandnew]

Gift cards would have to be exempted/declared, the same as if you had the cash.

ROFLMAO!! This made me chuckle! Imagine showing up to your 341 and handing over $500 in Safeway or Publix gift cards to the trustee??!! Once puchased, they have no cash value...how would this "asset" be distributed to any creditors??? I dunno, this just made me giggle

[mintz]

I would do the IRA if you have nothing else to spend it on

[momof3b1g]

What about oil changes? New tires? Gas for vehicles?

Did you do your online pre bk class?

[okiemom2008]

If you have any home repairs that you need done, now would be a good time. You should not spend it on luxury items. Perhaps a laptop for a student?

Well we are moving and I dont want to fix up my landlords house! We let our house go in bk so we are starting from scratch. Just wish I could get some gift cards to keep ahead

[mintz]

If you have any home repairs that you need done, now would be a good time. You should not spend it on luxury items. Perhaps a laptop for a student?

[okiemom2008]

Gift cards would have to be exempted/declared, the same as if you had the cash. Toiletries, paper products and cleaning supplies have a lo-o-o-ng shelf life though! I think we have enough of that stuff to last a year now. Our attorney said we don't have to list consumables on our asset schedules.

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Thanks. We move around so much that I just do not want to haul things from place to place. That is why I was hoping gift cards would work.

[Trixie007]

Gift cards would have to be exempted/declared, the same as if you had the cash. Toiletries, paper products and cleaning supplies have a lo-o-o-ng shelf life though! I think we have enough of that stuff to last a year now. Our attorney said we don't have to list consumables on our asset schedules.

[okiemom2008]

I think you could safely spend more on groceries, toiletries, cleaning supplies. We have a household of four and spent almost 2k total this month for regular groc & stocking up. Also, our microwave died this week, so we bought an inexpensive new one.

Does anyone know if you can buy gift cards to grocery stores like wal mart so that you can use that later on after the bk to help you get by?