Many of the potential clients that come to meet with me at Halcomb Singler used a credit card to put gas in their car to get to my office, during their last trip to the grocery store and maybe even for their electric bill. I get it. No one I have ever met with has been out buying big screen televisions or taking a 7 day cruise the week before they meet with me. Most folks considering bankruptcy are just trying to survive financially, and for many of them that means putting everyday living expenses like gas, groceries and utilities on a credit card.
There is nothing wrong with using a credit card for these things. However, at the end of that initial meeting if the potential client tells me that they definitely would like to file bankruptcy one of the first things I do is tell them to stop using credit. This makes many people very nervous. Many have been using credit cards to get by for some time and are afraid that they will not be able to make it from paycheck to paycheck without using credit to fill the gaps.
However, the bankruptcy code dictates if credit is used too close to the filing of a bankruptcy petition that the debt may not be dischargeable. Bankruptcy code section 11 section 523(a)(2)(C)(1)(i) et seq., states that a discharge of bankruptcy does not discharge an individual debtor from any consumer debts owed to a single creditor and aggregating more than $600.00 for luxury goods or services incurred by an individual debtor on or within 90 days before the order for relief under this title are presumed to be nondischargeable. In addition, cash advances aggregating more than $875.00 that are extension of consumer credit under an open end credit plan obtained by an individual debtor on or within 70 days before the order for relif under this title are presumet o be non-dischargeable.
So what does this mean? It means that if you buy a good or service not reasonably necessary for you or your family on credit that costs more than $600.00 or take a cash advance of $875.00 or more 70 days prior to filing bankruptcy that theses debts are presumed to survive bankruptcy. The easy way to make sure that you aren't stuck with a debt after bankruptcy due because it was deemed to be a luxury is to stop using credit once you have decided to file a bankruptcy.
In addition to being the right thing to do, stopping your use of credit will help you decide how to live your life after bankruptcy, which is really the most important part. What I mean is that many people realize when they stop using credit that they should surrender a car or house that they really cannot afford. Others realize that they are eating out too much. Some realize that they really can afford their house and cars and that it has been the debt payments on credit cards, medical bills, etc., that is causing their financial hardship. Stopping your use of credit will allow you to create an accurate budget based on the reality of your income and will put you on the path to financial success after bankruptcy because how will you ever know what you can actually afford until you stop using credit?
For those who live in Carmel, Indianapolis, Fishers, Noblesvile, Zionsville and the surrounding areas. Halcomb Singler does offer a free initial consultation to discuss bankruptcy. If you would like to schedule an appointment contact us at 317-575-8222 or click here.
Halcomb Singler, LLP, is a debt relief agency. It helps people file for bankruptcy under the bankruptcy code. No attorney-client relationship with the firm of Halcomb Singler, LLP, is created through this blog. Also, please note that Erika Singler is an attorney licensed in Indiana and does not seek to practice law in any jurisdiction in which they are not properly authorized to do so. The information contained in this blog is general in nature and should not be relied upon for the circumstances of any individual(s) or businesses.
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