Sign in to follow this  
CamMan

Beginning v. End of year to file Ch7 BK?

Recommended Posts

Hi. I'm going to file for Ch. 7 BK and was wondering if there was any benefit to filing end of 2012 or beginning of 2013 tax return wise. Figuring to get back 3K with about 1800 of it being EIC. Thanks.

Share this post


Link to post
Share on other sites

The Trustee might take your refund regardless, unless you have received, cashed and spent it prior to filing (keeping track on how it is spent).  I say "might" as you do not give enough info here to be sure.   For example, you might be able to take an exemption and protect the entire amount or a portion thereof.  

 

You need to ask this question of an attny in your area.

 

Des.

Share this post


Link to post
Share on other sites

Like Des says, you really need LOCAL legal advise on this.  Depends on the trustee as to what they would allow.  If you spend it first, and he disallows it, you'll have to come up with the money before he'll discharge. 

Share this post


Link to post
Share on other sites

Like Des says, you really need LOCAL legal advise on this. Depends on the trustee as to what they would allow. If you spend it first, and he disallows it, you'll have to come up with the money before he'll discharge.

 

 

This isn't what Des meant. Many states have a wildcard exemption where refunds can be exempted. If you use federal exemptions available in your state you may exempt over $10K worth of wildcard assets.. If you're legally able to exempt the refund then the trustee has no choice but to allow it.,
 

Share this post


Link to post
Share on other sites

Actually, some states, such as Florida, have an actual exemption for tax refunds.  Others have exemptions covering EIC.  Still others have that all important wildcard.  In my state, you better receive, cash and spend the refund before fiing or it goes to the Trustee.

 

Des.

Share this post


Link to post
Share on other sites

FWIW, I figure to file in March, we should get our refund in feb (over double what you mention) We will be buying things we despertly need and spending most of it, and exempt what is left (ofcourse, anything we buy will have to be exempted, also... washer... dryer etc etc) but We can use the Federal exemptions, So should be ok. Atleast that is the plan, the one hitch in the whole thing is I do own a small homebased business... but It will have a overall loss for 2012 and will barley be break even by the time we file and without me would be worthless... has no assets at all. If the trustee gets too difficult, I suppose he can have it and I can continue on as a sole p since everything is paid from 1 source, it would just be a pain. That and have to get more info on the wifes health, no need to file if we are gonna rack up a bunch of medical bills But, It is what it is. We just got served on one of her CC's and that is a Citi card so they are always the quickest... she is pretty well judgement proof other than getting her name off bank accounts. We will answer the summons and see how it goes I guess.

Share this post


Link to post
Share on other sites

Depends on how much you can exempt.   At least here in PA where you can choose between state and federal exemptions, we haven't had one tax refund turned over to the trustees.  Particularly if you are not using your (d)(1) household exemption, then your wildcard exemption is generous.  And if a small sum of money is unexempted, it is still not worth it for trustees to do all the work because they'd then have to mark your case as an asset case, serve all creditors, pay out all claims pro rata, etc.  That's a lot of work for the trustee to get a 25% commission of a tax return. 

 

Additionally, about 40% of my clients have small businesses- I'm not surprised because these tend to be the folks who rack up the debt trying to make the business work, and considering the last few years have been pretty brutal, they don't have the cash flow to cover the debt.  These businesses range from construction companies to envelope stuffing to (ironically) financial advisement.   I haven't had a trustee attempt to take a business.  Make sure you prepare a six month profit and loss for the business and a balance sheet.   If there are little/no assets in the business then there is probably no value- trustees tend not to impose a going-concern value on your business in a consumer bankruptcy setting (going-concern value is additional value based on the potential future stream of income, the intact entity being worth more than the sum of the individual parts).

 

Bottom line: you are probably fine so do not stress.  But you may want to have an attorney handle it for you in your local market. 

  • Like 1

Share this post


Link to post
Share on other sites
Guest
This topic is now closed to further replies.
Sign in to follow this