When you make the wise choice to seek bankruptcy protection from creditors, you do so because you need relief
and you desire some space to re-establish your financial independence. In essence, bankruptcy is an opportunity to get aggressive creditors off your back while you move toward a better future.
Unfortunately, some people see a looming bankruptcy filing as an opportunity to go on a spending spree. One last hurrah before they are under the watchful eyes of a trustee and a bankruptcy judge. For the reasons below, this is a bad idea and may undermine a debtor’s ability to reap the benefits of bankruptcy.
Accumulating New Debt Prior to Bankruptcy
Even as you head toward bankruptcy, life goes on and so do necessary expenditures. You still need to eat food, to have working utilities, to have a car, to receive medical care, and to have a roof over your head. All of these continued expenses are completely reasonable, and a trustee or creditor would have a hard time trying to argue otherwise. However, when it comes to unreasonable credit card expenditures or cash advances, these expenses can raise unwanted attention and have negative consequences for a debtor.
Trustees have a duty to carefully examine a debtor’s credit accounts when they file for bankruptcy. Creditors can also scrutinize pre-filing spending. The following actions may be red flags for trustees and creditors:
· Credit card debt in the last 90 days. If a trustee or creditor sees that a debtor has maxed out the available credit on his or her credit cards in the 90 days preceding a bankruptcy filing, a trustee may look closely at every purchase made during that time frame. The key question is whether the purchases were necessary or reasonable. If they are not-like box seat season tickets to the Nets-and demonstrate a lack of financial responsibility, the creditor may treat these as “luxury” purchases and ask the court to deny discharge of those debts. A trustee may also look to challenge the entire bankruptcy,
· Cash advances in the last 70 days. In addition to credit card purchases, the trustee and creditors will suspiciously view any cash advance exceeding $950 made in the 70 days preceding bankruptcy. This applies to consumer cash advances and not to commercial cash advances. If a debtor cannot meet his or her burden to prove intent to repay the cash advance, then a court may determine that the cash advance cannot be discharged through bankruptcy.
You Need a Bankruptcy Attorney
Bankruptcy is a smart, responsible choice for many people struggling with debt. If you want to maximize the benefits you can experience through bankruptcy, contact Levitt & Slafkes, P.C. Our attorneys have 30 years of practical experience and take pride in providing accurate, comprehensive legal advice so that our clients can make confident decisions about their financial futures. Let us help you attain debt relief. Call Levitt & Slafkes, P.C., at (973) 323-2953, or reach us online to schedule a free consultation.
We are proudly designated as a debt relief agency by an Act of Congress. We have proudly assisted consumers in filing for Bankruptcy Relief for over 30 years.