It is finally here. The day retailers everywhere and my younger sister look forward to every year! Black Friday. It seems to be starting earlier ever year. Last night after Thanksgiving dinner I ventured out with my wife and some other family members to see if we could score some good deals. I have never gone out on these Black Friday shopping trips in the past, and now I know why I will likely never go again. We dropped by the local Walmart at about 10:00 p.m. and it was insane. It was literally shoulder-to-shoulder packed with lines snaking around the store. These events say something about our society. I am not sure what, but it says something.
Black Friday and Bankruptcy
So how does Black Friday relate to bankruptcy? Credit card use. Many people undoubtedly use their credit cards when purchasing gifts and in any population there are people who will need to file for bankruptcy in the near future. What you need to know is that the purchases made on your credit card today may come back to bite you if you end up needing to file for bankruptcy in the near future.
Luxury Goods or Services Over $600
If you buy luxury goods or services totalling more than $600 in the 90 days prior to your bankruptcy there is a presumption that these debts will not be discharged in your bankruptcy case. This means that the credit card company can come into your bankruptcy case and object to those specific charges being eliminated. So what is a luxury item? Well, the new big screen is likely going to qualify. If you bought groceries, you will likely be okay.
Cash Advances Over $875
Similarly, cash advances taken out on your credit within 70 days prior to your bankruptcy filing and totalling more than $875 are presumed to be non-dischargeable. While there is some grey area in what is a luxury item and what is not, when it comes to cash advances we have a hard time winning that battle. If you took out large cash advances for your Black Friday adventure in the Phoenix area, plan on paying them back.
How to Avoid the Black Friday/Bankruptcy Dilemma
Well, the obvious response is to not use your credit card for these purchases or cash advances if you needing to file for bankruptcy soon. If you have already made these purchases you can make sure you pay them off, or you could wait to file your bankruptcy until you are outside the look-back periods. For instance, on cash advances you would have to wait until at least February 3rd to file your bankruptcy and on credit card purchases you would need to wait until at least February 23rd.
If you need to discuss your bankruptcy options please feel free to give me a call at (480) 420-4028 or via email at email@example.com.
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