Bankruptcy is a debt relief option that can stop creditors from taking action against
you if you are delinquent on loans. When you file for bankruptcy, most
of your debt is discharged or wiped out. If you want to make purchases
before or after filing, it could affect the process or result in more debt.
Making Purchases Before Filing for Bankruptcy
When you file for bankruptcy, you are claiming that you are unable to pay
the outstanding amount of your debts. Making a purchase on credit before
the process finishes could raise a red flag for creditors or the judge
reviewing your case. Generally, if you purchase a large item within 90
days of filing for bankruptcy, your creditor may challenge the purchase,
and it might not be discharged with the rest of your debt. You will be
responsible for paying the amount you charged.
In some cases, significant spending before filing for bankruptcy could
result in allegations that you are committing actual or constructive fraud.
With actual fraud, the creditor claims you made a purchase with the intent
to defraud the company. Constructive fraud charges could occur if you
did not intentionally defraud the company, but because you made a purchase
before filing for bankruptcy, fraud was implied.
Making Purchases After Filing for Bankruptcy
In many situations, it is possible to make a large purchase on credit after
you file bankruptcy. However, before making this decision, you must consider
your financial situation and the conditions for the type of bankruptcy
you filed. For some types of bankruptcy, you may be required to get permission
prior to buying a high-priced item. You must also determine if the purchase
is a necessity and, if you are purchasing on credit, how incurring the
debt will affect your finances.
If you are planning to make a large purchase, you will typically have to
rebuild your credit before buying a luxury item. It could take months
or years for your score to improve, and even after the increase, you could
face high interest rates because of the bankruptcy.
Contact Albaugh Law Firm for a Free Initial Case Evaluation
If you’re having trouble keeping up with your expenses, contact our
team to discuss your debt relief options. We have extensive experience
in bankruptcy law and will thoroughly review your financial situation
to determine solutions that may be right for you.
For legal help with your bankruptcy matter, call us at (904) 637-1839 or
contact us online.