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I am filing for bankruptcy once I get my tax refunds back. In what way can i use the refund money please to avoid any problems?

Tempe, AZ |

I'm not planning on paying off the debt...I really could use the money for living expenses and business expenses and I also have a daughter. So how can I use the money and how can I not use the money??

I truly wanted to use the money in the wisest way possible to create a bright future for myself and daughter! Thanks for you help!

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Attorney answers 7


How much did you get? How long are you waiting to file? Start with setting aside attorneys fees and filing fee. Then pay regular ongoing expenses - groceries, utilities, gas, rent, etc. If that does not answer the question, you should provide more details about how much you are going to get and how long it will last.

Diane L Gruber

Diane L Gruber


Yes, the smartest use of the money would be for attorney fees and the court's filing fee.


The absolute smartest thing you can do, bar none, is use the refund to hire a good bankruptcy attorney. There is almost nothing more important than that, as mistakes representing yourself can cost significantly more down the road.

If you have an attorney, direct this question to them. If your attorney is unresponsive, you have the wrong attorney. The most important thing to do is track those funds. Make sure you can clearly identify the receipt of the refunds and exactly what you spent it on. Living expenses are good, medical or related items can be alright, avoid luxury items or paying off creditors or family members.

Again, most important - get an attorney to help. I, like many of us on here, offer free consultations. Make use of it.

Douglas Edmunds is in the business of helping people and companies file for bankruptcy protection. The bankruptcy code requires that I call my firm a "debt relief agency." Any answers or information provided is for general information purposes only and is not intended to be a legal opinion, legal advice or a complete discussion of the legal issues. This is not intended to create a attorney-client relationship. Each individual's situation is different and you should seek independent legal advice from an attorney familiar with the laws of your state for specific information.


Don't give any money to friends or family. Only use it for living expenses and keep track of how you spent it in case the trustee wants to see the list. Good luck.

Be sure to designate "best answer." If you live in Oregon, you may call me for more detailed advice, 503-650-9662. Please be aware that each answer on this website is based upon the facts, or lack thereof, provided in the question. To be sure you get complete and comprehensive answers, based upon the totality of your situation, contact a local attorney who specializes in the area of law that involves your legal problem. Diane L. Gruber has been practicing law in Oregon for 26 years, specializing in family law, bankruptcy, estate planning and probate. Note: Diane L. Gruber does not represent you until a written fee agreement has been signed by you and Diane L. Gruber, and the fee listed in the agreement has been paid.


Talk with an attorney about your situation. Most firms including mine give brief free consultation. You want to make sure you use the money correctly


If you need to money to survive and pay for necessities such as an engine repair on your car, or a leaky roof, or a bad tooth (I think you get the idea) you will be ok. If the tax refund is very large, the more justification and tracking you will have to show. I have clients who have received say $4,000 or so in a refund and they pay me as their attorney, and then use the money for necessities. Some passage of time can be helpful as well. A couple of months is usually sufficient if the refund not too large. Also you may be able to hang on to the refund or part of it in the bank because you do have exemptions (protections) available that are designed by the law allow people to file bankruptcy and yet not be desolate. Seek an experienced bankruptcy attorney for a consultation before taking any action.

The answers offered by this attorney are for general information purposes only and you should not take action based on these answers without first speaking with an attorney who can go over all the facts of your case in person. Every case is different; a change in facts results in a different answer.


The first and most imporant rule is not to use the money to pay money you owe to friends or family. In fact, don't give the money to anyone. The answer to your question will depend on several factors, including how much money you are receiving, in your jurisdiciton how much money you are allowed to keep and when you are going to file your bankruptcy. An excellent way to spend part of the money is to retain an experienced bankruptcy attorney near you. Good luck.


This is always a tricky question. In my experience, spending money can be done in a way that is not fraudulent or unlawful but goes towards goods and services necessary for everyday living.

An attorney who is experienced in your county is the best judge of this issue. These issues are different county to county and Trustee to Trustee.

I would seek counsel in a forum that is confidential.

Best of luck.

Jim Webster

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.