If you are facing a particularly difficult financial situation, you may consider filing for Chapter 7 bankruptcy. A Chapter 7 bankruptcy allows the person filing to use non-exempt assets to help pay for some of their debts. Then, whatever debt is left over is discharged and the person filing is considered to have a clean slate and a fresh start. This can be a great option for individuals who have incurred a lot of debt, especially credit card debt, but don’t have too many assets.
However, it is important to know that if you are considering filing for bankruptcy it is not the time to excessively use your credit card or make last minute purchases on credit with the hope the debt will be discharged in a bankruptcy. Your credit card charges in the days leading up to filing for bankruptcy may not be discharged if used to purchase certain items.
If you decide to file for a chapter 7 bankruptcy, information about your credit card debt and purchases will be turned over to the Court and Bankruptcy Trustee. Purchases made for “luxury goods” within 90 days of the bankruptcy will not be discharged in the bankruptcy. Luxury goods include items that are goods or services that are not necessary for the support of the person filing for bankruptcy or their family. These types of extras could be anything considered extravagant or indulgent—designer clothes, fancy appliances, home remodels, new cars, or vacation expenses.
When determining if a good purchased within 90 days of bankruptcy is a luxury good, the court may also consider why you purchased the item. If the item was purchased simply for fun or extravagance, knowing you never intended to have to pay for it, the debt will not be dischargeable. In fact, the court may consider that purchase fraud (buying an item without the intent to pay)—Debts accumulated through this type of fraudulent action will not disappear when you file for bankruptcy but will remain your responsibility to pay.
As a result, it is especially important to end spending on your credit card when you decide to file for bankruptcy, and never attempt to have an unnecessary shopping spree in the months before filing. Luxury charges made within 90 days are presumed by the law to have been made with the intent not to pay, and it becomes extremely difficult to discharge these debts.
Get Lawrenceville Chapter 7 Bankruptcy Advice
Lawrenceville Bankruptcy is designed to give you a fresh financial start so you can recover from a difficult financial situation and improve your future. However, knowing where to begin is a key step so that your bankruptcy can truly better your situation. An experienced Lawrenceville bankruptcy attorney can help guide you through the process from the very beginning and make sure you avoid any mistakes that could lead to non-dischargeable debts.
For help with the bankruptcy process, or just to learn more about how bankruptcy might help you gain stable financial footing, contact the Ballard Law Group today for a consultation by calling (404) 800-9939.