Spent tax refunds

[okane]

I heard alot of times if you had a big refund, the trustee asks what you spent your tax refund on when you file if you no longer have the money. Lawyers I spoke to says it needs to be have spent on necessary things, does the trustee ask for receipts of all the money spent from your refund?

[StaciMM]

Answer truthfully. If you spent it on a vacation while charging up lots of things to file BK 3-6 months later, there might be an issue. Keep in mind they may ask a general question, hoping you'll answer w/ something they can use.

Such as-at my hearing, the trustee questioned me about a worker's comp settlement I received May '04. (I listed it on the petition as non-employment $ received.) After I answered, he asked 'did you use it to repay family' as I had mentioned I'd used it to catch up on bills like rent, cars, etc. and to help w/ living expenses as our income didn't cover everything. Had I said yes (but the answer was no) he would have been able to make them give that $$ back - & he would get a cut - as payments to family are not allowed, even as far back as 1 year.

[okane]

did they ask for receipts?

So you were fine after you answered that you did spend it on bills? No receipts?

[Whittio]

So you were fine after you answered that you did spend it on bills? No receipts?

The key here is to be truthful what ever that may be. I don't know your case, but it sure seems like you're trying to make sure you'll be OK if you have the right answer.

If you spent it on vacation and paying bills, say that. Say, "I spent some on a vacation, and the rest on bills".

If you didn't pay anything on bills or catching up your payments etc., and you say YES, then what if they DO want proof?

Also remember if you paid anyone more then $600 (I think that's what it was) in the last 90 days, you have to report that too. So depending on when you got your refund, and when you spent it, you have to disclose if you gave anyone more then $600 in the last 3 months.

I would assume it all depends on how MUCH you're talking about here. If you got back $5000 and bought new furniture and new carpet, well, you need to fess up to that. I don't know that they could make you take your furniture and your carpet back, but might use that as "assets".

[ndbigler]

We were kind of lucky when it came to that. My husband had just had hernia surgery this last January, and we got our refunds in February. We used our refunds to live off of till he could go back to work. The trustee didn't ask us for reciepts or proof, although the surgery was included in the bankruptcy, so I guess that was proof right there. We used the refund for rent, utilities, normal living expenses. Plus a computer. But he didn't second guess the computer purchase.

[Minnymouth]

I used my refund to hire my lawyer to file BK - Trustee just smiled and said "used it for a good purpose", huh!!!

Minny

[StaciMM]

No, he didn't ask for receipts. After I gave a general answer on where the money went (pay off the balance on the vehicle totalled in the accident-he did ask about when that was paid, catch up on rent & vehicle payments, as well as utilities, etc. and to cover living expenses, pay insurance, etc.) he asked if any was used to repay family members & if there was any left.

Our income for last year was about 1/2 what it was the year before, so saying it covered living expenses wasn't unreasonable.

So you were fine after you answered that you did spend it on bills? No receipts?