Thread: Buying "luxury goods" before bankruptcy filing?

There was a discussion among attorneys about the legalities of filing for bankruptcy in which it was said that "luxury items" over $800 could be considered fraudulent if an individual purchases said items on a personal line of credit, and subsequently proceeds to file bankruptcy less than six months after the purchase of so called "luxury items". Furthermore if the purchase exceeds $5000 it's possible for the courts to find the purchaser guilty of that fraud if they file within less than a year of the purchase.

Assuming the premise is correct, and excluding any discussion of income to debt ratios, liquidity, cash flow, etc... does anybody have any idea what type of fraud charges are likely to be levied in such a case? To express the question again differently... the underlying issue is how assumed repayment to the creditor determines sentencing by the court if purchases made were done so without good intentions to repay, or seem totally unreasonable based on a "complete financial picture" of the individual making the purchases. Misdemeanor 1,2, 3- felony, etc. Penalties associated with the charges??

Consult a bankruptcy attorney.

Originally Posted by DavidNY

Consult a bankruptcy attorney.

well said...

It would have to be establish your intent was to fraud your credit lenders. For example -you bought fine art and a diamond ring. Then a few months later you got in an accident and were unable to work.

If someone tries to rip off your credit card lenders even more, then yes, they will be prosecuted and could jeopardize the bankruptcy. Not everyone is approved to wipe our all their debts because they claim they can't pay them.