Results 1 to 5 of 5

Hybrid View

  1. #1
    Join Date
    Jul 2017
    Posts
    1

    Default What Happens if You Win Money Before You File for Bankruptcy

    My question involves bankruptcy in the state of: Arizona

    I retained lawyer ($200 ) for initial consultation for beginning BR two weeks ago. No court papers filled out yet, Won $2,900 at casino yesterday, now what happens to it? Can I pay lawyer the $1,600 fee for BR or should I not mention it to anybody? My BR will be over by next tax time and I will be paying taxes next year on it.

    Or could I play dumb and pay off one of my creditors now? I will be seeing my BR lawyer later but just wanted some advice quickly.

  2. #2
    Join Date
    Mar 2013
    Posts
    18,340

    Default Re: Retained Lawyer but Not Filed Yet, Won Some Money, Now What

    Pay the lawyer.

    Favoring a creditor just prior to bankruptcy can make you ineligible for bankruptcy. So can hiding money.

    Bankruptcy lawyers typically want the entire fee up front before they do anything anyway because, guess what, you can discharge the attorney fee in bankruptcy so they don't take a chance on that.

    Don't play games with this.

    Call the attorney and tell him you have the money.

  3. #3
    Join Date
    Oct 2014
    Posts
    8,238

    Default Re: Retained Lawyer but Not Filed Yet, Won Some Money, Now What

    Quote Quoting adjusterjack
    View Post

    Favoring a creditor just prior to bankruptcy can make you ineligible for bankruptcy.
    That is not true. Favoring a creditor just prior to bankruptcy is a preference payment that the bankruptcy trustee may recover from the creditor who received it. So, while the preference payment doesn’t make the debtor ineligible, it is also pointless to do it. The money will go to the trustee anyway.

    Quote Quoting adjusterjack
    View Post
    So can hiding money.
    Certainly any dishonesty on the bankruptcy schedules could potentially result in the court denying a discharge.

    I suggest that the OP send part of the money to the IRS as an estimated tax payment to cover the tax he will owe on the winnings, assuming the casino did not withhold tax (or didn't withhold enough). He ought to consult his attorney about what to do with the rest of it. It may well be that he ought to simply pay the lawyer with at least some of it.

    One other piece of advice to the OP: if you are in financial trouble, don’t gamble. You got lucky winning this time, but in general, gambling is a losing activity, and it is foolish to blow money you cannot afford to lose.

  4. #4
    Join Date
    Sep 2010
    Posts
    478

    Default Re: Retained Lawyer but Not Filed Yet, Won Some Money, Now What

    You must advise your attorney as the winnings must be disclosed on question 5 of the Statement of Financial Affairs. In addition, if you have suffered any gambling losses over the 12 months prior to filing, those loses must be disclosed on question 15 of the Statement of Financial Affairs.

    Absolutely you can and should use the funds to pay the attny especially if you have no other way to pay.

    Paying estimated taxes is, I suppose, ok, but if you end up getting a 2017 refund you will have to turn the entire amount over to the Trustee. The Trustee will then do a calculation as to what belongs to the bk estate and return the difference to you, if any.

    Lastly, since you won the money in July, if you file bk in July, the "income" will not be used to calculate your "current monthly income" for means testing purposes. However, if you elect to hold off filing until August the winnings will count and will have to be included in the CMI calculation.

    Talk to your attny.

    Edt to add: This response assumes you will be filing a Chapter 7.

    Des.

  5. #5
    Join Date
    Mar 2013
    Posts
    18,340

    Default Re: Retained Lawyer but Not Filed Yet, Won Some Money, Now What

    Quote Quoting despritfreya
    View Post

    Paying estimated taxes is, I suppose, ok, but if you end up getting a 2017 refund you will have to turn the entire amount over to the Trustee.
    There are ways you can estimate your tax bill for 2017 based on income and withholding to date and extrapolate that for the rest of the year which will enable you to determine adjustments to your withholding so you break even with the IRS when you file your return.

    You can use software or do it by hand.

    You have 6 months left to the year. Proper adjustment for the rest of the can make a big difference.

    No sense making interest free loans to the government, like those people do who love those big refund checks.

    1. Sponsored Links
       

Similar Threads

  1. Chapter 7: Should We File Bankruptcy?
    By brokeincali in forum Bankruptcy Law
    Replies: 7
    Last Post: 03-30-2008, 05:56 PM
  2. Chapter 7: Can I File Bankruptcy
    By vickash in forum Bankruptcy Law
    Replies: 1
    Last Post: 08-08-2007, 01:54 PM
  3. Bankruptcy Issues: Can You File For Bankruptcy Twice
    By gabby2006 in forum Bankruptcy Law
    Replies: 1
    Last Post: 09-08-2006, 09:27 AM
  4. Bankruptcy Issues: File for Bankruptcy or Not?
    By spinmaster in forum Bankruptcy Law
    Replies: 2
    Last Post: 03-22-2006, 06:21 PM
  5. Bankruptcy Issues: Should I file for bankruptcy?
    By hope27 in forum Bankruptcy Law
    Replies: 4
    Last Post: 07-29-2005, 01:43 AM
 
 
Sponsored Links

Legal Help, Information and Resources