If you are in financial distress and considering bankruptcy, what you do in the near term can impact your chances of success. Specifically, a court should not think that you are taking advantage of the bankruptcy process. Accordingly, you should try to control your spending over the holidays when a bankruptcy filing is a possibility.
When you are filing a Chapter 7 bankruptcy, your debt will ordinarily be discharged at the conclusion of the process. However, the court may look at what you did immediately prior to the time that you filed for bankruptcy. If you opened up new credit cards or ran up debt on your existing ones, the court may not look favorably on your situation.
The court may look at large amounts of spending in the 70 to 90 days prior to filing for bankruptcy as presumptive fraud. Creditors would see that your spending was done immediately prior to declaring bankruptcy, and they may object to the discharge. The same thing goes when you have taken cash advances to use for holiday shopping.
You would have the burden of proof to show that your spending was on basic necessities as opposed to luxury purchases. Holiday shopping would not be considered a basic necessity. If you are found to have committed bankruptcy fraud, you may not have the debt discharged.
Never assume that your debt will go away just because you are filing for bankruptcy. Bankruptcy courts try to be equitable for all involved, and that includes your creditors.
Contact a Memphis Bankruptcy Attorney Today
The Hurst Law Firm can counsel you both before and during the bankruptcy process to give you the best chance of success. To speak with an attorney, you can send us a message online or call us today at 901.725.1000.
