Tax filing should I wait?

March 10th, 2007 by Questions

Hello,

I just completed my taxes for tax year \’06, but didn\’t actually file them yet. My husband and I are planning on filing bankrupty at the end of this month. The results of the tax return are I owe the cra 4000.00 and he is owed a refund of 2500.00. Should we use his refund to pay my balance owing? Should we wait to file until after we start the bankruptcy process? We could really use his refund due to our present financial situation…would it be wrong/fraudulant for us to use his refund for household expenses and not pay my balance as it will be part of the debt included in the backruptcy? Please advise.

Questions

One Response to “Tax filing should I wait?”



March 12, 2007 at 2:00 pm, Barton Goth, GCO, Bankruptcy Trustees said:

No, definitely do not use the refund to pay the outstanding balance as this could be perceived by other creditors to be a preference and potentially cause you difficulties when it comes to getting a discharge from bankruptcy. The best thing to is simply start the process, this way the refund will be sent directly to the trustee and used as required by the Bankruptcy and Insolvency Act in a manner that won’t prevent you from being eligible for discharge.

As for using it for household expenses, this is risky as if any of your creditors are able to suggest that you knowingly held on to these funds in an effort to reduce the recovery to your creditors than the court could deem it to be fraudulent and again it may cause some significant troubles when it comes to discharge time.

Please post a follow up comment below:

(Note: comments are reviewed by moderators and then posted after approval. In addition, due to high volume some of the comments might not be posted.)