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Top Ten Bankruptcy Mistakes: Continuing to use your Credit Card

TOP TEN BANKRUPTCY MISTAKES

#3
Continuing to use Credit Cards

The Bankruptcy Code is designed to give the honest debtor a second chance and to treat all creditors in a fair and uniform manner. One problem which arises is the situation where the debtor continues to use credit a short time before filing a bankruptcy. Under such circumstances it can be argued that this is abusive to a particular creditor.

Therefore, certain consumer debts and cash advances incurred at 90 and 70 days, respectively, before filing maybe deemed to non-dischargeable. The ultimate goal of bankruptcy is discharge of debts and so non-dischargability is to be avoided. In addition, to the non-dischargeable aspect of these items it can also create a great deal of additional legal expenses to you. That is because a creditor’s claim for non-dischargability will likely require a response from your legal counsel and additional charges will apply.

A Debtor does have a defense that if the goods and services acquired were “reasonably necessary for the support and maintenance of the debtor or a dependent of the debtor” that they are still dischargeable. However, all of this takes time and money to argue.

As a rule therefore, put those credit cards away at least 90 days before filing your case. Otherwise, you may be in for an objection to your discharge and a finding by a judge of non-dischargeability. Even if the survive these allegations you will be incurring a great deal of needless expense.

[Guy Vining, a bankruptcy attorney, in metro-Detroit, maintains his office in Taylor, Michigan where he serves the downriver communities of Monroe, South Rockwood, Gibraltar, Brownstown Township, Grosse Ile, Woodhaven, Trenton, Southgate, Riverview, Allen Park, Lincoln Park, Dearborn, Dearborn Heights, Westland, Wayne, and Ecorse. If you or a family member of friend would like a no-obligation no cost consultation/financial analysis, just call or E-mail Guy Vining of Vining Law Group, P.L.C to schedule a meeting.]

Top Ten Bankruptcy Mistakes: Borrowing from Friends

       TOP TEN BANKRUPTCY MISTAKES

   #2

 Borrowing From Friends

 

    If you are in serious financial difficulty it ordinarily results from credit card and other non-secured debt that you can not pay. In a consumer bankruptcy, whether Chapter 7 or Chapter 13, all of the unsecured debt can ordinarily be discharged or reduced and paid off over an extended time for a fraction of the debt

Borrowing from friends or family to keep from filing a bankruptcy will usually amount to throwing “good money after bad.” If you are unable to keep up with your credit card and other debt then how can you hope to repay the family member or your friend?

The Bankruptcy Code and Bankruptcy Rules set forth a complex set of requirements for the equitable treatment of all parties in a bankruptcy. Bankruptcy Rule 1007(a)(1) requires that you list all creditors in your bankruptcy case – even family and friends. All creditors must be treated equally with respect to distributions of property, if any.

Why burden a loved one with your financial situation and possibly lose a friend or create family tension? Moreover, if a loan might help then why not seek professional help to see if the loan can be secured to protect that lender?

Only analysis of your particular situation will be able to determine a prudent course of action. However, in most instances it is better not to put in jeopardy a friend or family member pre-petition. After your other debts are discharged it would be safer for them and more helpful to you to receive a loan.

[Guy Vining, a bankruptcy attorney, in metro-Detroit, maintains his office in Taylor, Michigan where he serves the downriver communities of Monroe, South Rockwood, Gibraltar, Brownstown Township, Grosse Ile, Woodhaven, Trenton, Southgate, Riverview, Allen Park, Lincoln Park, Dearborn, Dearborn Heights, Westland, Wayne, and Ecorse. If you or a family member of friend would like a no-obligation no cost consultation/financial analysis, just call or E-mail Guy Vining of Vining Law Group, P.L.C to schedule a meeting.]