You knew at the end of last year that you were experiencing a bit of a financial crunch, but you didn’t think it was that bad. You really thought everything would work out.
In any case, you now know that you’re going to have to file for Chapter 7, but you’re haunted by the memory of a few purchases you made during the holiday season. Will those debts derail your bankruptcy?
You may face some questions
The bankruptcy process is ultimately designed to be fair to both debtors and creditors. As such, creditors do have a chance to contest (through an adversary proceeding) the dismissal of some of your debts if they believe that you should still have to pay for certain purchases.
One of the most common reasons that this can occur is when large purchases or purchases of luxury items are made shortly before a consumer files for bankruptcy protection. In general, any new debts you took on within 90 days of filing for Chapter 7 that total more than $675 to one creditor can be suspect. (If fraud is ultimately suspected, then the trustee can actually go back as far as deemed necessary.)
What does this mean for you? It all depends on your situation. If you bought a few presents for your family (or yourself) during the holiday rush and have made payments on them, the trustee may not find that an issue – especially if you offer a reasonable explanation about how your circumstances have changed since then.
If you haven’t made any payments or can’t explain how you had intended to pay the bill to the trustee’s satisfaction, then those debts might not be dischargeable. That does not mean, however, that the rest of your debts, as allowed, cannot be discharged or that your entire petition will be denied.
When you’re worried about specific issues, the smartest thing you can do is to seek legal guidance that is tailored to your situation.