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Terry L.
Terry L., Attorney
Category: Bankruptcy Law
Satisfied Customers: 2875
Experience:  Better Business Bureau. 18yrs bankruptcy experience. Chicago Bar Assoc. American Bankruptcy Institute member.
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I AM A MECHANIC BY TRADE AND FILED BANKRUPTCY IN APRIL OF 08(CHAPTER

Resolved Question:

I AM A MECHANIC BY TRADE AND FILED BANKRUPTCY IN APRIL OF 08(CHAPTER 13) I purchased some tools and diagnostic equipment worth about 18,000.00 for 8,000.00. The only way i was able to purchase these tools is i sold one of my coon dogs for 8500.00 cash about two months ago and had this cash in a safe. Can i use this 8500 cash purchase as a deduction with? I just didnt know if the bankruptcy court would look at my o8 taxes and see that i had that much deductions and want the refund money. Another thing is this was a cash sale on the dog but did get a cash reciept from the guy i bought these tools from at the flea market. I just dont know if the bankrptcy court will know how i got the money to buy the tools because as u know in chapter 13 u still barley have enough money to get by on.
Submitted: 8 years ago.
Category: Bankruptcy Law
Expert:  Terry L. replied 8 years ago.
Hi.
If you disclosed the dog on schedule B of the petition, then you should be ok to use the funds as you see fit. Your case is designed to protect the assets. Technically, you should have obtained permission from the court/trustee to liquidate the asset. You can include any business related transaction for your tax return purposes. If you disclosed the info, then the bankruptcy trustee should have no issue with the transaction, as long as your plan was paying enough to protect the asset.

If you did not disclose the value of the animal with the initial filing, you may have to file an amended plan so that you are paying enough of the debt to protect the value of that asset. Call your attorney and they can file the appropriate motion.
Customer: replied 8 years ago.
THEY DIDNT ASK ME ABOUT MY PETS WHEN IF FILED CHAPTER 13! I RECIVED ABOUT $3500.00 IN TAX REFUND LAST YEAR AND SPENT SOME OF IT ON TOOLS AND THE REST I USED TO BUY THE TOOLS I DESCRIBED ABOVE IT WAS NOTHING SAID ABOUT PAYING MY FUTURE RETURNS TO BANKRUPTCY COURT. I JUST DNT WANT TO GET MYSELF IN A PICKLE. IF I DNT CLAIM THESE TOOLS I WILL RECIEVE ABOUT 2,00O BACK AUTOMATICLY WITH STANDARD DEDUCTION. WILL I HAVE TO PAY THIS TO THE BANKRUTCY COURT?
Expert:  Terry L. replied 8 years ago.
Because you did not disclose this in the petition (line 31 of schedule B asks about animals) you should talk to your attorney about amending the schedules to add it, then possibly amending the plan to account for the value, depending on your state exemptions.

Your chapter 13 plan determines if you have to turn over the refund to the trustee, in IL where I practice, a debtor normally doesn't need to turn it over to the trustee. By amending, you are being forthcoming with the court. If you didn't have to turn over the refund last year, you probably won't this year either. I would take all allowable deductions on your taxes that you qualify for.
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