Your financial situation is dire and rapidly getting worse, so you’ve made the decision to file for bankruptcy. You’re waiting a little to either save up the filing fees or to get through the holiday season — and that’s fine.
Just watch what purchases you’re making on credit during this time. Otherwise, you may find yourself saddled with some unexpected debts even after your bankruptcy is over.
The court has an invested interest in making sure that the bankruptcy process is fair to both debtors and creditors. With that in mind, creditors can object to the discharge of any debts that they think are unfair. If the trustee in your case agrees, you’ll have to repay them.
In particular, you need to be cautious about incurring any kind of charges on your credit cards related to “luxuries.” Under the bankruptcy code, debts to a single creditor that total $675 or more that were incurred within 90 days of your petition for relief can be suspect, as can cash advances on your credit cards that total $950 or more. The rule is there to keep people from going on minor spending sprees with their remaining credit before they file bankruptcy or taking out new credit cards that they know they’ll never repay.
If you do make purchases on credit or take cash advances during this time for essentials, make sure that you keep receipts so that you can prove where the money went. Keep in mind, anything that isn’t absolutely necessary to meet your immediate needs — like food or utility bills — could potentially be considered a “luxury.”
An attorney can help you better understand the intricacies of bankruptcy law and how the rules will apply to your case. Discuss your situation over carefully.