Expert: Mark J. Markus- California Bankruptcy Attorney - 1/23/2009

Question
MY HUSBAND AND I ARE GETTING READY TO FILE CHAPTER 7 BANKRUPTCY AND HAVE ACTUALLY ALREADY PAYED THE LAWYER.  WHEN I QUESTIONED HIM AS TO WHAT TO DO ABOUT OUR TAX REFUND HE TOLD ME TO DO MY TAXES NOW, USE THE MONEY FOR RENT, FOOD, CAR REPAIRDS ETC. AND THAT THEN WE WOULD HAVE TO WAIT 3 MONTHS AFTER THE MONEY IS SPENT TO FILE BANKRUPTCY OTHERWISE THEY WOULD TAKE IT ALL.   DOES THIS SOUND RIGHT? MY FEAR IS THAT I WILL SPEND THE MONEY AND THEN THE TRUSTEE WILL WANT IT ALL BACK? ANY THOUGHTS?

Answer
Yes, that sounds right if you don't have sufficient exemptions under your state's laws to protect the amount of the refund.  (For more information on exemptions, please see http://www.bklaw.com/exemptions.html) I'm not sure why you'd need to wait 90 days though, unless you are using the refund to repay creditors.  You're better off using it to pay ordinary expenses, like rent, food, etc, instead of repaying existing creditors.   Then I don't see why you'd need to wait 90 days after the money was spent.