Debts by fraud are not dischargeable when filing for bankruptcy; those who accumulate debt they have no intention of paying back will still be responsible for it after bankruptcy. Using credit cards irresponsibly and accumulating luxury debt right before you file for bankruptcy is a red flag, especially if purchasing luxury items like designer clothes and taking vacations.
Factors that Determine Debts by Fraud
he purchase of luxury goods or unnecessarily large amounts of items right before a bankruptcy filing can cause creditors to suspect fraud. According to Section 523 of the Bankruptcy Code, purchases totaling $500 or more that are made within 90 days of a bankruptcy filing are considered non-dischargeable.
Creditors can claim that these purchases were made fraudulently, making you liable for the purchases. Cash advances of $750 or more taken within 70 days of the filing are also presumed fraudulent and non-dischargeable.
Intent to pay is also a factor in fraud cases. If the cash advance was taken or purchase of luxury goods was made before the 90- or 70-day period, respectively, before the bankruptcy filing, then creditors must prove that the creditor had no intention of paying that debt. This can be difficult to do, of course, because it requires more than demonstrating that the creditor made poor financial decisions or acted irresponsibly.
Contacting a Lawyer
If you have questions about fraudulent debts – or other debts that are not dischargeable in bankruptcy – and how they can affect your bankruptcy, contact Warren & Migliaccio, L.L.P. We can go over your case for bankruptcy and whether any of your purchases may be considered debts by fraud. Contact us: (888) 584-9614.