Watch the Christmas spending

Posted by Kevin on December 11, 2011 under Bankruptcy Blog | Be the First to Comment

Every year about this time, my bankruptcy practice slows down.  Why?  People are focused on the holidays and buying presents.  Then, in January and February, I get lots of calls for consultation.  Sort of like a last hurrah.

Well my advice is that if you really want to file bankruptcy in January or February, then do not use your credit cards during the holiday season.

When you file bankruptcy, you want to get a discharge from your debts.  There are exceptions to discharge, however.  One exception is exceptions is for consumer debts totaling over $500 to a single creditor for luxury goods or services incurred with 90 days of filing.  Another is for cash advances totaling over $750 obtained within 70 days of filing.  For these situation, the presumption is that if you bought the HD tv or took the cash advance, you do not get the discharge.

In addition, there is the catch all that if you obtain credit by false pretenses, then it usually is not dischargeable.  This could mean that you ran up a credit card and then filed.  The court takes the position that the debtor had no intention of re-paying the debt.

A word to the wise.