Black Friday Shopping Could Have Some Potential Bankruptcy Filers Seeing Red
With the holiday season coming up, many people are thinking about buying gifts for family and friends. People in financial trouble should be aware that a spending spree for the holidays could impact their ability to discharge certain debts if they file bankruptcy shortly thereafter.
11 U.S.C. Section 523 of the bankruptcy code lists numerous exceptions to the ability to discharge (get rid of) certain types of debts in bankruptcy. This section of the bankruptcy code can be applied to keep someone from getting rid of debts incurred within 90 days of filing for bankruptcy that were over $500.00 and were incurred for “luxury goods or services,” which are defined as “goods or services not reasonably necessary for the support or maintenance of the debtor or a dependent of the debtor.”
So, if you take a credit card out for your Black Friday shopping and you subsequently have to file for bankruptcy, you could have to repay the purchases made on that account if the credit card company contests your case.
Someone experiencing financial hardship and contemplating filing for bankruptcy relief needs to be aware that their spending habits in the months leading up to the bankruptcy could impact their ability to discharge all of their debts. This doesn’t mean that someone cannot provide a joyful holiday season for their families; just that bankruptcy won’t necessarily keep them from having to pay for it in the New Year.
Potential filers should disclose to their bankruptcy attorneys any recent charges on accounts so any potential issues with Section 523 can be analyzed and addressed before filing a bankruptcy case.