Luxury purchases 6 months prior to filing for bankruptcy
Hi, I am wondering how luxury purchases on credit cards six months before filing for bankruptcy would appear? I took a vacation about five months ago and made some large purchases about six months ago. I have been making payments since but have been unemployed. I assumed I would be able to pay off these bills when my husband returned to work, but he operates in oil and he has had a down year. He has not worked for some time, and I find myself having a lot of trouble keeping up with payments, and considering filing bankruptcy.
Having these types of purchases does not prevent you from filing for bankruptcy. When you meet with an advisor they will determine whether you meet the definition of insolvent. This means that either your assets are valued less than your debts and/or after meeting your monthly expenses there is really no money left to service the debt. If you meet this basic criteria you can file for bankruptcy. Where you may run into difficulties is whether these transactions would affect your ability to receive an automatic discharge from your bankruptcy. It is possible your creditor(s) may take issue with the type of purchases that were made on your account. They may argue that you made these purchases knowing you would be unable to pay them back and therefore would argue you should not be eligible for an automatic discharge. If they feel that is the case they would have to oppose your discharge from bankruptcy and a court hearing would be scheduled. At the hearing, the creditor would plead their case to the bankruptcy court. The Registrar (or judge) will listen to their concerns and will ask you some questions. From there a decision will be made regarding your discharge. A likely outcome, if they agree with the creditor, is that you may have to make some additional payments into your bankruptcy to be discharged.
It is not certain that the creditor would oppose your discharge if you file a bankruptcy. It is just as likely that these purchases will not present an issue and your bankruptcy proceeding would not be affected. If you need assistance with your debt than I would not let this issue prevent you from getting the debt relief you need.