Some more bankruptcy thoughts…

Some people who are on the brink of filing for bankruptcy often think about “squeezing” out just one more debt before they do the actual filing -- maybe buying a big screen plasma television set for the living room or a last-minute trip with the Mrs. (or Mr.) or something nice for the kids. If you were thinking like that, then you had better think again.

The court won’t need to hire a forensic financial analyst to determine that that last big credit card charge -- $2,000 for a week long stay at Bellagio Casino in Las Vegas – was made only the week before you filed. You should be aware, that not every debt can be discharged, especially those that were incurred less than 60 days before you filed, and which were for “luxury goods or services.” And, it won’t matter at all that you crapped out at the tables. The cash advances that you took on your card from the ATM when you did crap out at the tables are also going to be considered non-dischargeable.

Worse still, if the court even thinks that you intentionally ran up your credit cards for a last minute pre-filing spending spree, then your whole bankruptcy petition might be denied, not just that one creditor. Even if the court doesn’t catch your little indiscretion, the creditor may appeal, and request the debt be considered non-dischargeable.

That’s the problem with credit cards today, everyone takes them – you can use credit cards to pay your utilities or your rent, buy groceries, and even pay off your taxes or student loan. For many people, that’s simply a convenience and not a problem. But for many people, especially those with heavy personal debt, they may not have the cash available to make their Sallie Mae payment, or satisfy their tax obligation. So, it’s not unusual to use a credit card (if you’ve got room on one, that is) to make those payments.

But for individuals planning to file bankruptcy, that is a bit of an issue. You see, as I said before, certain debts are not dischargeable – like student loans, criminal fines and related debt, taxes (of course), alimony and child support payments (but you wouldn’t want to do that, anyway, would you?), and fraudulent debt – that means you have to pay them. It will not matter at all if you used a credit card to make those payments, though purely unintentional. The court could rule that the credit card that you used to make those payments is not dischargeable. You will be stuck.

Just because you can’t discharge a debt in a Chapter 7 bankruptcy doesn’t mean you can’t consolidate or reorganize it. A Chapter 13 bankruptcy filing may be just the thing you need to consider, to get a handle on your debt.

Bankruptcy: It’s a lot to think about -- what you can do, what you can’t do, what can be discharged, what won’t be discharged – you’d have to have a law degree to puzzle it all out. It can be very confusing, but DebtStoppers attorneys can help you sort it out. All you have to do is ask.

--Debt Diva

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