15 Dec If I File Bankruptcy in January, Will I Have to Give Back the Presents I Bought for Christmas?
Usually, no. But you might have to pay for them. The Bankruptcy code allows you to discharge almost all of your debts in a Chapter 7 case. One common type of obligation that won’t go away is a secured debt where you buy something and the seller holds a security interest in the item until it is fully paid for. Cars, for example, are almost always purchased in this way.
Most of the time when you use a credit card to buy something, there is no security interest created. Certain stores, however, secure the obligation to pay them that way. This is typically true of electronics stores such as Best Buy or Circuit City. They make it easy to finance a television or computer, but hold a security interest in the product purchased.
Then, if you file bankruptcy, they can assert their security interest and you will either have to continue to make the payments on that account, give back the product, or work out some other arrangement with the store.
Additionally, under the Bankruptcy code, you can’t discharge consumer debts for luxury goods that are owed to one company which add up to more than $500 and were incurred within 90 days of filing bankruptcy. So, if you use your visa card too much for Christmas presents and then file Bankruptcy in January, you might have to re-pay those charges.
Before you incur more credit on your cards, you might consider the comments in this excellently written article by my colleague, Wendell Sherk.
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