Where You Buy and What You Buy Can Matter in Bankruptcy in Indiana
In writing Bankruptcy in Indiana, I like to use actual court cases as teaching tools. So when one of the Columbus bankruptcy lawyers who works in the Mark Zuckerberg bankruptcy law office there told me about the “American Express case” from North Dakota, he knew I’d be interested.
Bankruptcy in Indiana readers and clients know that in either Chapter 7 personal bankruptcy in Indiana or under Chapter 13 bankruptcy law in Indiana, it’s often credit card debt that is discharged by the bankruptcy court. In this North Dakota case, though, the bankruptcy court ruled that the entire American Express credit card debt (over $16,000) was, by definition, non-dischargeable.
With almost 25 years’ experience as a debt consolidation lawyer and bankruptcy attorney in Indiana, working with tens of thousands of debtors, one thing I keep stressing is that if you file bankruptcy in Indiana, the court is going to look very closely at purchases you made in the months leading up to the filing date. In other words, if you made a lot of luxury, unnecessary purchases, don’t expect the court to forgive the debt you incurred buying that stuff!
Here’s what happened in the North Dakota case:
- K. filed Chapter 7 bankruptcy on September 4, 2009.
- American Express, one of K’s creditors, objected. (In providing bankruptcy information in Indiana, I’ve often talked about the Creditors’ Meeting, where creditors have the opportunity to object to the debtor’s request to have the court “forgive” or discharge that debt.
- Within the three months leading up to K’s filing, K used his American Express car 59 times, increasing his debt by close to $10,000.
- The court commented that, while they didn’t know exactly what was purchased, the amount of the charges, “and the fact that the charges were made at various department stores and specialty retailers” lead the judge to believe that these charges were incurred for luxury items.
- The court ruled that K. had acted with “reckless disregard” against American Express and dismissed K’s bankruptcy petition.
As I’m always saying (and as any good bankruptcy lawyer in Indianapolis would confirm), Indiana bankruptcy help is meant to give honest debtors the chance for a fresh financial start. Bankruptcy is not meant for irresponsible spenders who hope to walk away from their obligations.
Think of it this way: Bankruptcy in Indiana is a safety net, not a meal ticket!
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