Each year, hundreds and thousands of Americans head to stores to wait in line so they can take advantage of Black Friday sales at their local retailers. While you might be tempted to go out on Black Friday so you can get some of your holiday shopping done, you may want to reconsider if you have plans to file for bankruptcy in the near future.
Luxury Items & Bankruptcy
Even though there are great deals on Black Friday, some of the purchases you charge on your credit card might be considered “luxury items” if you file for bankruptcy. Under the Bankruptcy Code, you cannot discharge credit card purchases for luxury items made within 90 days of filing for bankruptcy.
When you successfully file for Chapter 7 bankruptcy, you can eliminate your unsecured credit card debt without having to worry about paying it back. But if the court believes you have charged luxury items to your credit card, you will still have to pay back the debt during bankruptcy.
While it is unclear what the exact definition of a “luxury item” is, some courts have ruled that necessities and general living expenses are not considered “luxury items.” So if you use your credit card to fill up your gas tank or to pick up new diapers, your bankruptcy claim should be unaffected. However, if you use your credit card to buy an expensive diamond ring you found on Black Friday, then you can expect the court will refuse to discharge the debt in bankruptcy. However, if the credit card company doesn’t file an objection to the charges you make during the 90-day period, then the debt can be discharged with the rest of your unsecured credit card charges.
Cash Advances, Bankruptcy, & Black Friday
You should also be careful taking a cash advance on your credit card if you are anticipating filing for bankruptcy. Many consumers like to pull out a little extra cash to have on hand in case they come across something they want at a major Black Friday event. You should avoid taking a cash advance at least 60 days before filing for bankruptcy, otherwise, the charge won’t be included in your unsecured debt.
We Are Here to Handle Your Bankruptcy Case
Our legal team at the Law Office of Seni Popat, P.C. hope you have a wonderful holiday season with your family and loved ones. If you have more questions about how Black Friday purchases can impact your bankruptcy case, get in touch with our law firm so we can review your situation and explain all of your options under the law. We are here to help you get out of debt today!Give us a call at (718) 340-3385 to request your free consultation with one of our friendly and compassionate lawyers.