Is My New York Shopping Spree Dischargeable in Bankruptcy?
You may realize that credit card debt is often written off in a Chapter 7 bankruptcy or a Chapter 13 bankruptcy and that you are not required to sell clothing and other personal items to pay the non-dischargeable debt.
But that doesn’t mean you should go on a big shopping spree before filing for personal bankruptcy. The U.S. Bankruptcy Court will rule that your New York shopping spree debt is not dischargeable if you file for bankruptcy soon after running up the credit card charges. You will have only increased what you owe.
Bankruptcy law is meant to provide a fresh start to consumers who are overwhelmed by unmanageable debt that they cannot repay. But the law also provides considerable protection to creditors when the petitioners have bought luxury goods or taken out cash advances on credit cards just before filing for bankruptcy.
Banks and credit card companies will review the statements of charges when they receive notice of bankruptcy filings. Running up charges over a short period of time with no intention to repay the debt is considered bad faith in the consumer-creditor contractual relationship.
In general, charges for luxury items worth $550 or more made within 90 days of filing for bankruptcy are assumed to be non-dischargeable. If a creditor sees them on a statement, they will file an objection with the Bankruptcy Court to have that portion of your debt declared non-dischargeable. Creditors may object to any large purchases or balance transfers, luxury goods, or items that seem to be unnecessary purchases.
After one creditor files an objection, your other creditors are going to take a hard look at what you owe them and what debt they should forgive without an objection.
What Debt Cannot Be Discharged Under Bankruptcy?
Bankruptcy laws protect most people from losing their homes, cars, clothes, furnishings, retirement accounts, and business tools in bankruptcy. But certain debts must be paid. In addition to recently run-up credit card debt, you will not be able to discharge the following types of debt in bankruptcy:
- Alimony
- Child support
- Tax liens
- Income taxes
- Student loans (unless you can demonstrate undue hardship)
- Loans owed to or guaranteed by government agencies under specific statutes
- Drunk driving conviction debts
- Debts incurred by willful and malicious behavior
- Condominium or cooperative association fees (in Chapter 7).
Contact a Bankruptcy Attorney Today
If you are facing debt you cannot handle, get experienced legal guidance. Don’t try to game the system by running up your credit card before filing for bankruptcy. If you reside in the Hudson Valley or the New York City area, Michael H. Schwartz, P.C. in White Plains, N.Y., can help you understand your options under federal bankruptcy law and chart a course toward a more secure financial future. Contact NY bankruptcy attorney Michael H. Schwartz, P.C. online, or call 1-800-ON MY SIDE to set up a initial consultation.
Michael H. Schwartz is the largest filer of bankruptcy cases for people living in Westchester and Rockland counties in New York. A graduate of New York Law School, Michael has been licensed to practice in New York State courts since 1983. He is also licensed to practice in the U.S. Bankruptcy and District Courts for the Southern, Eastern and Northern Districts of New York and the District of New Jersey as well as the Second Circuit U.S. Court of Appeals. He is a graduate of Max Gardner’s Bankruptcy and Veterans’ Boot Camps. Several media outlets have reported on his cases or sought his insights, including The New York Times.
