Shopping Spree Could Complicate Bankruptcy

The Birmingham bankruptcy attorneys at Parkman White, LLP are often faced with clients that go on a financed shopping spree just prior to contacting us about filing bankruptcy.  Their theory is usually, “Why not go ahead and borrow all I can borrow if I am about to file bankruptcy anyway?”  They convince themselves that they are entitled to one last splurge before submitting themselves to the oversight of the Bankruptcy Court.

Our lawyers have seen clients that are doomed for bankruptcy intentionally max out their credit cards just months prior to seeking bankruptcy protection.  They spend thousands of dollars racking up additional debt by purchasing unnecessary items, even though they have no money in the bank.  It is common to see family trips to Disney World, or purchases of expensive clothing on the credit card invoices of clients that know they can’t afford it and that know they are destined for bankruptcy.

However this type of pre-bankruptcy behavior can complicate that client’s qualification for bankruptcy.  Even if they are able to qualify, the Bankruptcy Court may rule that those debts that were incurred for non-essential items in close proximity to the bankruptcy filing cannot be discharged and must still be repaid.

Particular scrutiny will be given recent financed purchases for large ticket items that are not necessities, such as jewelry, furniture, vehicles and vacations.  If the Court determines the debtor has engaged in this type of behavior, it can be uncomfortable for the person asking the Court for bankruptcy protection.

If you are considering bankruptcy in Alabama, you should consider the ramifications of each purchase you make and not complicate your potential bankruptcy.  While it should not be problem to continue to use credit for essential items such as food and transportation, anything more would not be advised.  Should you have any Alabama Bankruptcy questions, contact our Birmingham bankruptcy lawyers at Parkman White, LLP at 205-502-2000 to discuss your debt relief options.