Have you ever been in the
checkout aisle at the grocery store and added several magazines, packages of
candy or gum, or pocket sized hand sanitizer to your shopping cart? Or have you
ever been walking through the mall and walked in to a store one minute and then
walked out an hour or so later with one too many shopping bags full of
merchandise? These types of impulse buys can wind up costing you more money
than you have, and leave you feeling deflated soon after you get home. But
these types of purchases are minor compared to things that you could buy
instead. Things like houses, cars, and boats are larger ticket items that can
also be bought on impulse, and leave the purchaser strapped too tightly
financially.
If you have made a
purchase that you can’t really afford, and are thinking that bankruptcy is the answer, there are some things you need to
know about how a newly acquired big ticket item will be viewed in your case.
Take the example of a car, bought just before you filed a bankruptcy case. In
that instance you might expect:
•
The lender to seek full repayment of the
debt if you filed a Chapter 13. You can normally pay less than what is owed on
a car when you propose a Chapter 13 Plan of repayment, but if you have
purchased a car too close in time to filing your case, you will be required to
pay the full amount back to the lender, or return the car.
•
The lender to push you to reaffirm the
debt right away if you filed a Chapter 7. The way to hang on to your property
in a Chapter 7 is to reaffirm the debt, and this has the same meaning as if you
were signing a brand new contract for the debt. In some cases you might be able
to persuade the auto lender to give you different terms in the reaffirmation
than what your contract provides for, such as a slightly lower interest rate.
But if you just made the purchase, it is unlikely you will receive any breaks.
•
You may have to face questions about your
intent regarding the debt if you made the purchase just before your case was
filed. One of the things that is routinely asked at your first meeting of
creditors (the 341 meeting) is whether you incurred any of the debt you are
attempting to discharge with the intent of never making repayment. When loans
are taken out right before a case is filed, it can appear as if you never
intended to pay back the loan. If the lender can find facts that support this
claim, you might not be able to discharge the debt at all.
These are extreme
examples, and do not come up frequently. But, there are times when the need to
file bankruptcy arises very quickly after having taken out a loan. If you lose
your job, or are hurt, you might not be able to pay tomorrow what you thought
you could afford today. If you have questions about what happens when your
debts are incurred close to the date your case is filed, call us for answers.
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