There are benefits to filing bankruptcy before the Holidays. There are also benefits to finally bankruptcy after the holiday. On one hand, bankruptcy debtors with a fresh start before the Holidays may enjoy them without the stress of delinquent bills and the creditor collection action that goes with them. On the other hand, bankruptcy debtors with a fresh start after the Holidays may look to the new year and put the prior year behind them. 2020 is a year that everyone wants to put behind them.
First and foremost, know that incurring large charges on a credit card shortly before filing for bankruptcy may be considered fraudulent and the credit card company may object to their discharge. This may be avoided by delaying the bankruptcy filing, especially if filing for bankruptcy was not a conscious consideration at the time of the purchase. However, considering filing bankruptcy at the time of the purchase, i.e., never planning to satisfy the obligation, may be considered bankruptcy fraud.
Federal bankruptcy law in Title 11 states that any debt obtained by fraud, misrepresentation, or false pretenses is nondischargeable in bankruptcy. This means that the debtor remains legally responsible for the debt after the bankruptcy case is over. Any credit card charge or cash advance that a debtor does not intend to repay at the time of purchase or advance is considered fraud.
While it may be difficult for a credit card company to successfully prove fraud because it must prove that a debtor had no intention to repay the debt at the time it was incurred, the law presumes certain charges or cash advances are fraudulent and these charges will not be discharged in the bankruptcy case unless the debtor proves the absence of fraud.
The following are presumed fraudulent and nondischargeable:
Charges for luxury items within 90 days of bankruptcy. If more than $725 is charged on a single credit card for luxury goods or services within the 90-day period before filing bankruptcy, these charges are presumed to be nondischargeable. Luxury items include goods and services not reasonably necessary for a person’s support or maintenance.
Cash advances within 70 days of bankruptcy. Also, any cash advances of over $1,000 in aggregate obtained during the 70 days preceding the bankruptcy filing are presumed nondischargeable.
Thus, filing bankruptcy after the holidays may be problematic if credit card charges or cash advances are incurred under the circumstances described above. For those debtors who do not have the aforementioned issues, bankruptcy is still an excellent option to gain a fresh start, especially in 2021. To determine your options for filing bankruptcy as we put one of the most stressful years in modern human history behind us, contact the experienced attorneys at the Morrison Law Group.
Theron Morrison has helped 8,000 people file bankruptcy and gain a fresh start. Call 801.456.9933 to schedule a FREE consultation. We have locations in Ogden, Logan, Sandy, and St. George to serve the residents of the counties of Weber, Cache, Salt Lake, Utah, Morgan, Davis, Washington, and surrounding areas.
