$6000 Tax Refund

[helpmeout]

6k refund? You want to declare bankruptcy? I'm gonna keep quiet on this one.

Last year I got a $1K refund AND a bonus where I took home almost $5K.

You know how long that lasted? 1 week. I used it to get my utility bills caught up, buy my son glasses, get contacts for myself, got some needed spring/summer clothes for my kids as well as stocked up on items that would last through the summer (the time that my childcare costs the most). The only splurge I did was to buy a family membership to the Bronx Zoo so I can take the kids on day trips as I couldn't afford a real vacation and set aside $500 for Christmas. I ended up having to cash in the $500 CD so that I can make my car payment that summer.

I am filing for bankruptcy on Monday because I am getting a bonus again this year and while my attorney doesn't think it will be a problem, she wants to file before I get it to be safe. Not as much as last year, but it is a lot.

And it is already spent, along with my $2K tax refund (which I will get in March and is exempt). Childcare is very expensive where I live and the babysitter who I used that didn't cost as much is not available this summer.

[Meatstick]

6k refund? You want to declare bankruptcy? I'm gonna keep quiet on this one.

Why keep quiet, spill the beans and tell us all something we don't know ??

One could write an novel on the various reasons why people receive large tax refunds or any size refund at all. There is a whole mess of people who don't have any income at all yet they still get money back come tax time. Many, many reasons and I am just curious as why you want to keep quiet if you can enlighten us all ??

[mommy2lulu]

We have never got back more than 1500 tax refund, so I was in total shock when the accountant told me how much we were getting. There were so many credits that we were eligable for that I didn't even know existed. If we would have got the 5k in November when we decided that we were going to quit paying minimums on our ccs and file bk within a few months, then maybe we could have paid off a couple smaller ccs, and maybe we wouldn't have decided to file. But since we quit paying cards months ago, if we used that 5k to pay down our debt now, we would be exactly where we were in November again with all the fees and rate jumps. Yeah 6k is a lot of money, but put towards our debt, its like spitting on a fire and just prolonging the inevitable.

[Overmihead]

Please don't be judgmental. $6000 doesn't go as far as it used to do. Paying for attorney fees, things a person couldn't do while paying just the minimums on credit cards (medical, dental, auto repairs, etc). Having $6000 in the bank does not mean that someone shouldn't try to better their financial house and long term outlook by declaring bankruptcy.

Well said. Ours will be in this range (first time ever for a refund this large), but then when we start listing everything we have had to put off....well, it will be very easy for us to spend it on legitimate, very-overdue expenses.......dental visits/teeth cleaning, some school clothes for the kids, having the septic tank pumped out, major tune-ups/repairs/tires for our vehicles that both have over 150K miles, one of our kiddos needs braces, our dishwasher has been blinking all the lights at us and working when it wants to, stocking the pantry.....and then of course, the attorney fees. We won't even be able to cover all of this, we'll just have to prioritize. Point being, a $6,000 tax return is no indication of whether or not a person needs to file BK.

[newbie2]

6k refund? You want to declare bankruptcy? I'm gonna keep quiet on this one.

Please don't be judgmental. $6000 doesn't go as far as it used to do. Paying for attorney fees, things a person couldn't do while paying just the minimums on credit cards (medical, dental, auto repairs, etc). Having $6000 in the bank does not mean that someone shouldn't try to better their financial house and long term outlook by declaring bankruptcy.

[nc73]

6k refund? You want to declare bankruptcy? I'm gonna keep quiet on this one.

[mommy2lulu]

Sunflowers, we are buying a bed for our 2 year old with our refund. The lawyer said to keep it inexpensive, if we spend $1000 to buy a princess bedroom set for a 2 year old, the trustee will not be happy and most likely say that he can allow $100 or whatever for a simple bed, but that we have to pay the rest back. Just think "needs," and err on the side of caution, and you should be okay. If your 11 year old NEEDS a bed, then you should probably do it, but just be realistic with how much you spend. And keep receipts!!!

We got back 5k today (woo-hoo!), paying 1300 to the lawyer, and using the rest for car repairs (120K tuneups and new brakes for both cars, and 2 new tires for one of them), dental work for us both, a bed and possibly a dresser for our daughter (from Ikea, el cheapo!), groceries, and buying the remaining 3 online classes that my husband needs to take so he can graduate in July. I might ask the lawyer if I can get prescription sunglasses. I need them sooooo bad, but I worry that it will look extravagent.

It is so tempting to go on a shopping spree, but the lawyer said that is exactly what the trustee doesn't want to see. We are planning to file Mar 1, but may extend that out if the refund isn't spend yet. It is BLOWING my mind to see almost 6k in our checking account right now!!!

[BKDefender]

It has been mentioned before, but if you file bankruptcy during January through March, you can fund your last year's Roth IRA up to the $5k/year max AND fund this year's Roth IRA up to the $5k/yr max. So if you have $4,900 then fund a 2009 Roth IRA for you, presuming your jurisdiction exempts IRAs. Then just file a few days or a week afterwards.

--William

[sunflowers]

Would this work??

My husband and I are going to use our tax refund to file but my main question is how to make sure we spend our refund wisely.

I was told to spend it before filing and we are but I am wondering if buying my kids new beds would be okay. I am pretty sure for my one son, who is 3 and still in a toddler bed with a crib matress purchasing a new bed would be fine. But my other son who is almost 11 needs a new bed and matress as well and that is what I am having a hard time with.

Any comments on this? We live in Indiana.

[okiemom2008]

Yes, paying any loan off is preferential payments, and if it's for over $600 the trustee will go after it, take the money back off the private student loan service and distribute the payment to all your creditors.

As to buying a new vehicle, just be sure to check out your state's limits on vehicle exemptions. Here in Ohio it's a paltry $1000 (or maybe it was $1500, I just remember it was very tiny). So spend $6000 on a car, you will have to pay the trustee any amount over your state's exemption. So maybe use it for a down payment on a car, but don't put in any more $ than you can exempt.

I have checked Texas vehicle exemptions and from what I can tell we have 60k we can exempt in whatever we wanted.

[woeisme]

would paying off a private student loan be considered peferential payment?

Since we are giving up our only vehicle in bk--would buying a new one be a good thing to spend refund on our would they just take it?

Yes, paying any loan off is preferential payments, and if it's for over $600 the trustee will go after it, take the money back off the private student loan service and distribute the payment to all your creditors.

As to buying a new vehicle, just be sure to check out your state's limits on vehicle exemptions. Here in Ohio it's a paltry $1000 (or maybe it was $1500, I just remember it was very tiny). So spend $6000 on a car, you will have to pay the trustee any amount over your state's exemption. So maybe use it for a down payment on a car, but don't put in any more $ than you can exempt.

[JoeBankrupt33]

In Colorado, you can exempt "The full amount of any federal or state income tax refund attributed to an earned income tax credit or a child tax credit."

In NOLO, it didn't mention child tax credit (only eic listed under public assitance), so I'm glad that I looked at the Colorado Revised Statutes too!

I'm not saying that this helps you, but often, people who are getting that much back have kids or earned income tax credit.

I have 4 kids, so I'm pretty sure that I could exempt $4000 from my tax return (unfortunately, I'm not getting even close to that).

[Tbornetun]

Save all the receipts, that is your best bet. They may and probably will ask to see them.

[naturegirlny]

This answered a question I had, I am considering filing and speak to a lawyer on Friday. I get my return on the 30th but there are things I need and my kids need. If I file will they want to see reciepts for what I bought with my income tax return?

[okiemom2008]

would paying off a private student loan be considered peferential payment?

Since we are giving up our only vehicle in bk--would buying a new one be a good thing to spend refund on our would they just take it?