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I received large Tax Refund after filing BK, but still before my debtors date, Can I spend on Medical/Dental?

Phoenix, AZ |

I filed with an attorney and he told me I have to give the refund to the trustee. Had I received check before file date I could have possibly kept for certain things. In this case, after filing I have been told I need big money for dental work. Can I do this and just explain to the trustee?

Attorney Answers 5

  1. Best answer

    This tax return is property of the estate.

    That is lawyer speak for, this return belongs to the trustee. If you spend this check, you will have to pay it back in a short period of time. If it is not paid back, then you may lose your discharge.

    I have had clients take this path, against my advice, and then lose their discharge because they could not (or would not) pay it back.

    I am sure you need the dental work done. But this is a risk not worth taking.

    Good luck.

    Jim Webster
    Scottsdale, Chandler, Mesa & Phoenix Arizona Bankruptcy Attorneys & Lawyers

    1845 S. Dobson Rd. Ste 201
    Mesa, AZ 85202

    (480) 464-4667

    We are a debt relief agency. We help people file for relief under the Bankruptcy Code.

    If you live in Arizona, please contact me for actual advice; this is just speculation. It certainly is not legal advice. I don't have enough information to give actual legal advice. I can only take the limited information presented and provide a idea of what you might do and how it may turn out.

  2. If you want a second opinion about whether or not you can claim the refund as exemption and therefore keep it, you should consult another local bankruptcy attorney. It would reckless of anybody to advise you in this forum without more information.

    If your attorney is right and you ignore his advice, you could risk losing your discharge. Spending money that belongs to the bankruptcy is a serious issue and you need to talk to your current attorney about this.

    First, the firm is a debt relief agency according to the U.S. Bankruptcy Code. We help people file for bankruptcy. We also do other stuff and we do it well, but Congress wants me to post this notice. Second, nothing on this site is legal advice. You are not my client unless you enter into a written agreement signed by you and me.

  3. You have a lawyer for a reason.

  4. Mr. Starrett and Mr. Riddle are correct. Whether you are entitled to retain any part of your large tax refund depends on the nature of the refund and the availability of exemptions-- all information your attorney surely has at hand. One factor that is totally irrelevant is your "need" for the funds. The refund, if due you on your petition date, is an asset of your bankruptcy estate subject to your claim of exemption, if any.

    Best wishes for an outcome you can accept, and please remember to designate a best answer.

    This answer is offered as a public service for general information only and may not be relied upon as legal advice.

  5. Your attorney has advised you correctly. In Arizona, tax refunds are not exempt.

    There is never a proper substitute for consultation with an attorney licensed in your area, when you are facing a legal problem. Please understand my answer to your question may be influenced by the laws of my state-which could differ from the laws of your state. No attorney-client relationship has been formed by my answering your question on Avvo.

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