#7 of 33 Things Not to Do When You Are About to File for Bankruptcy

Posted by on Sep 11, 2014 in Bankruptcy | Comments Off on #7 of 33 Things Not to Do When You Are About to File for Bankruptcy

#7 of 33 Things Not to Do When You Are About to File for Bankruptcy

Don’t file for bankruptcy if you are about to receive a tax refund or inheritance. Discuss the timing with your attorney. The bankruptcy trustee can seize any money that is a bonus or “windfall” within 180 days after you file your bankruptcy if you don’t have enough exemptions to cover it.

Each state has exemptions to cover basic living things that you need, such as household goods, clothing, some jewelry (wedding rings are the main example), and a small amount of cash. If those exemptions are used to cover what you have and then you get more, the trustee will want that for your creditors. Income tax refunds are a big item on their checklist. If you normally get a fairly large refund, talk to your attorney before filing. Sometimes it might be better to wait until after you receive it and use it on normal living expenses (car repairs, home repairs or maintenance). Your attorney can decide what would be the best time to file based on the income you’ve had for the past six months and what exemptions you have available.