BK Chap. 7 --> Questions (exempt./cash/tax refund...)

What is the name of your state? Florida

My husband and I owe around $35,000 in credit card debts, and we will be filing bankruptcy soon. We stopped paying our credit card bills about 6-7 months ago. Also, husband was in a car accident a few years ago, and just settled the case last month. We haven't received any money yet, because our lawyer is still negotiating to lower his medical bills. We won't be getting a lot of money, probably around $4,000 after the lawyer fees and medical bills. We don't own a house or expensive cars, and all our properties are exempt. Now, I know that the Trustee will know about the accident case and the settlement amount. We don't want the money to go to the creditors. Q1) So, what are the safest way to spend the money without getting in trouble? (We are thinking about buying a used truck, prescription glasses, cheap treadmill, clothes and spend some at the dentist.) Q2) Will it be safe to file bk immediately after we've spent the money? Or should we wait a month or so? Q3) Is it true that income tax refund is exempt in Florida? Or should we file bk after we get our refund? Thanks in advance.

[Ladynred]

Best thing to do with the money is spend it on necessities.. and keep all your receipts to show that it WAS spent on necessities. Still, I'd wait at least 60 days after that to file.. 90 if you can manage it.

Tax refunds may be vulernable depending on the amount of the refund and WHEN you get it. If you get your refund AFTER your discharge, its yours (usually).

How much cash can we keep?

What about our checking account, we only keep enough to pay some bills, and money doesn't stay in there for long, a week at the most. We only add money when we have to pay a bill. Will the Trustee take everything in our account? And keep taking every time we make a deposit? Or should we just stop depositing money?

About the tax refund, I think I read somewhere that it's exempt in FL, we're expecting around $700 in refund. I need to check and make sure we can keep the money. I ordered a book and should get it soon. What's your opinion on BK books? I ordered the Nolo 10th edition Chap. 7 BK book. I plan on doing the paperwork myself, so I'm hoping it will help me.

Thank you so much for your help!

[Ladynred]

The NOLO book is excellent, I have a copy

The Trustee is not going to take money out of your checking account or monitor your deposits and take money. If you have more cash in it than can be exempted, you may be asked you to fork it over to pay your creditors. They can prove what's in the bank only. The personal property exemption in FL is $1000, there is nothing specific regarding cash.

Tax refunds are NOT specifically exempted in FL , or any state that I'm aware of. The Trustee will ask if you expect a refund and if he thinks its enough to pay some of your creditors he'll get the refund. A refund of $700 may not be enough for a Trustee to even bother with.. if it were $7000 that would be different.

Thank you for your help, Ladynred.

I just got the Nolo book and this thing is full of information, I think it will really help me, it even has BK forms! Now, I was reading the exemptions here in FL, and under Personal Property... second list is "Federal income tax refund or credit". So, this means our refund is safe, right? Is this separate from our $2,000 (husband & wife) personal property exemption? Thank you again!