How you spend money before filing for bankruptcy can impact your case

How you spend money before filing for bankruptcy can impact your case

On Behalf of | Mar 9, 2022 | bankruptcy |

Say that you’ve been looking at your finances for a few months and realizing that there’s no way you can handle all the debt that you have. You simply don’t have enough money coming in and the debt is becoming overwhelming. To protect your future, you decide to file for bankruptcy so that you can get a fresh start. You’ve learned a lot and you believe you know how to be more successful with your financial decisions in the future.

Once you know that you’re going to file, though, you may start wondering if your spending habits still matter. Maybe a friend suggests that you could buy some things that you wanted on credit, knowing that you’re just going to erase that credit in the future. Perhaps you’ve been thinking about taking a trip or something of this nature. Can you do this?

Abnormal spending often looks like fraud

You can certainly spend money in some ways, but the spending should be in line with your normal spending habits. If you go beyond those, it could appear that you’re trying to fraudulently use bankruptcy to erase debts that you knew you could never afford. This can make it so that your case doesn’t go through, and you are denied a discharge.

For instance, simply using money to buy groceries and pay the utilities and other bills is fine. The court understands that you have to do this. Spending $10,000 to go on vacation right before you file is going to appear fraudulent, and that could upend the entire case.

Once you decide to file bankruptcy, it’s still important to know exactly what steps to take to make this go smoothly. Legal guidance is essential. Call a bankruptcy attorney to discuss your situation.