Things to Keep in Mind if you Obtain New Debt During the Holiday Season!

Things to Keep in Mind if you Obtain New Debt During the Holiday Season!

As the holiday season approaches, more and more people are using their credit cards to purchase that perfect present for the special people in their lives. Many people are trying to have one last holiday season with expensive and fancy gifts before they must file bankruptcy because of the financial difficulties they are facing. The debtors’ plan is to accumulate the debt, give people the presents, and then have the debt discharged when they declare bankruptcy after the first of the year. However, it is possible that some of this credit card debt may not be dischargable.

Section 523(a)(2) of the federal Bankruptcy Code attempts to stop credit card abuse, especially during the holiday season. In order to be considered exempt from discharge under this section, the debt must be obtained through material or false representations about the debtor’s financial condition.’ Meaning that the debtors may have submitted false information when applying for a credit card or intentionally purchased items that they knew they would be unable to pay for.

Typically, credit card companies use the following circumstances when objecting to whether or not a debt can be discharged:

  1. An increase in credit card activity shortly before the debtor files for bankruptcy.
  2. When the debtor uses the credit card on vacation, for recreational activities or for travel.
  3. Using the credit card when the debtor is unable to pay back the debt (ie when you are unemployed, etc.)

Another key part of this bankruptcy code, Section 523(a)(2)(C), states that debts will not be dischargable if the debtor owes a single creditor more than $550.00 for luxury goods or services (“goods or services reasonably not necessary for the support or maintenance of the debtor or a dependent of the debtor”) that were purchased within 90 days of filing for bankruptcy.

Due to Section 523(a)(2) of the federal Bankruptcy Code, if you accrue a large amount of debt over the holiday season, you might have to wait four to six months before filing for Chapter 7 bankruptcy. Keep in mind that just because you are going to have to file for Chapter 7 bankruptcy, it does not give you an excuse to accumulate large amounts of debt. If you are unsure as to your recent debt will be unable to be discharged in a chapter 7 case, contact our office today and get legal advice from our experienced bankruptcy attorneys. Our appointments are free!

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