With Black Friday soon upon us, and the holiday shopping season, I want to get a message out to those folks who are struggling. Perhaps there are folks who know they are going to lose their jobs after the New Year. Perhaps there are folks who have been using credit to get by and now see a bankruptcy petition on the horizon. Perhaps these folks are figuring that they will have one last holiday with really great gifts courtesy of their credit card companies. If you’re reading this, and you’re thinking “wow, he’s totally speaking to me (or about my friend or relative)!” please keep reading.
One thing many consumers do not know is that when you buy “large-ticket” item, it may also come with it a security interest. In other words, that purchase may be a gift, but it may also be collateral. The lender (the store, or the bank that finances the store’s credit cards or credit lines) assumes a security interest. This is something to think about as you’re eyeing that appliance or jewelry. Will it prevent you from filing bankruptcy? Probably not. Will it complicate things? It just might. You may have to pay the debt even if you file bankruptcy or you may have to surrender the collateral. Or you might hear from the creditor months or years after the bankruptcy is over.
Last minute purchases can also get you into hot water. Using a credit card when you have no intention of paying the debt back can be considered fraud. Debts incurred through fraud cannot be discharged. In addition, such actions could be considered bad faith, and might lead to a dismissal or a denial of discharge, depending on the circumstances. What does any of this mean? The short answer is more attorney fees, more anxiety and the possibility that the bankruptcy case will not go as smooth as it otherwise could.
If you’re contemplating bankruptcy, don’t use credit cards for holiday shopping. Speak with an attorney. The last thing any debtor needs is to make a tough situation even worse.
