Can I buy a laptop computer with my tax refund before bankruptcy?

I get asked this over and over, and I have to say, “No.”

This time of year, clients are waiting to file bk until after they have received and spent their tax refund on exempt (protected) items, like food storage and clothing.  Some other items are protected under Utah law, but the laptop is not one of them.

Let’s say you buy a computer for less than $500, then the odds are pretty good that it will have too small of a resale value to attract a bankruptcy trustee, but it isn’t protected. ¬†20150202_092330

On the other hand, if you use it for your business, then up to $5,000 of its value is protected under a “tools of the trade” exemption

78B-5-506. Value of exempt property — Exemption of implements, professional books, tools, and motor vehicles.

(2) An individual is entitled to an exemption, not exceeding $5,000 in aggregate value, of implements, professional books, or tools of the individual’s trade, including motor vehicles to which no other exemption has been applied, and that are actually used by the individual in the individual’s principal business, trade, or profession.

Play it safe and spend the tax refund on food and clothing and vehicle repairs and you should be okay.