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Can you spend before bankruptcy? 

On Behalf of | Dec 1, 2021 | Bankruptcy

Hypothetically speaking, imagine that you have fallen behind on your bills to the extent that you can’t overcome the debt on your own. You’ve decided that the only way to solve this is to declare bankruptcy.

As you move toward the filing process, you start to wonder if you need to consider your spending in a new light. Are you still allowed to spend right before filing for bankruptcy, or are you going to create further legal issues for yourself?

Necessary spending is fine, but be wary about excessive spending

They’re certainly going to be things you need to spend on, considering the fact that bankruptcy can take months. You still need to pay the rent or the mortgage. You still need to buy food. You still need to provide for your family, if you have one. You can certainly still spend as you normally would, even if that means you are incurring debt on a credit card or in some other fashion.

What you need to avoid, however, is any sort of excessive spending. If you spend a lot of money on a credit card right before filing, it might appear as fraudulent activity. It makes it seem like you only used the line of credit because you knew you would never have to pay it back. For instance, you could be accused of fraud if you took a non-refundable vacation right before filing for bankruptcy, meaning the creditor has no physical assets they can obtain and no way to get that money back.

Bankruptcy is very useful, but it is also important that you know how to use the process properly. Make sure you carefully consider the legal steps that you’ll need to take so that your bankruptcy proceeds without any problems.