And yes, you’ll feel guilty suddenly having to go on a shopping trip right before you’re going bankrupt, but remember, this is your attorney advising you that you must convert your non-exempt item (cash from the tax refund) into exempt items (things that I can protect).
Just remember that if you file bk before you receive your refund, the trustee will take it. So, we must wait to file until after you’ve received and spent it.
So what do you do? Spend it. (And keep your receipts. The trustee will ask us to account for the refund money and tell him exactly what we did with it).
So let’s say you get your refund March 1, 2015. What do you do?
Better said, what don’t you do:
1. Don’t go buy a new toy like a dirt bike or a tv.
2. Don’t pay off any friends or family. This is a preferential transfer, to an insider no less, and it results in Mom and Dad being sued by the trustee.
So what do you do:
1. Spend it on exempt items under Utah Law. This basically means food, clothing, washer, dryer, fridge, freezer, stove.
(Did you see a computer on the list? No. Don’t ask me if that’s okay. It’s not).
2. And use the rest to pay me.
So let’s say you spend the tax refund on food storage March 1st and keep all of your receipts. When can you file? March 2nd.
Here is a relevant portion of the
An individual is entitlted to an exemption in …
(viii) (A) one:
(I) clothes washer and dryer;
(V) microwave oven; and
(VI) sewing machine;
(B) all carpets in use;
(C) provisions sufficient for 12 months actually provided for individual or family use;
(D) all wearing apparel of every individual and dependent, not including jewelry or furs; and
(E) all beds and bedding for every individual or dependent;
There are other items you can spend the money on, and this is by no means comprehensive, but this should give you a good idea on how to spend it. If you have questions on what to use it for, ask your attorney; that’s what he’s there for.