Can I Spend Money If I’m Planning to File for Bankruptcy?

spending money before bankruptcyWhen you’re considering filing for bankruptcy, it can be hard to know the right course of action. One of the main questions people ask themselves is “Can I spend money if I’m planning to file for bankruptcy?” The answer is that you can in some cases, but certain rules and regulations should be followed. Let’s take a look at what those are.

The “Recent Luxury Goods and Services” Rule

When you’re filing for bankruptcy, one of the rules you need to keep in mind is the recent luxury goods and services rules. This rule states that any purchases made within 90 days before filing for bankruptcy may not be discharged if they are deemed excessive or unnecessary.

Examples of such goods or services include:

  • Vacations
  • Large purchases such as furniture
  • Anything else that could be seen as extravagant compared to your current financial situation

An experienced bankruptcy attorney can advise on what counts as a luxury purchase in your case. You should consult with them before making any big purchases.

The “Preferential Payments” Rule

Another important rule when considering filing for bankruptcy is the preferential payments rule. This rule states that any payments made within 90 days before filing for bankruptcy will be considered preferential payments. They will not discharged via a Chapter 7 Bankruptcy.

Generally speaking, this means that any debts paid off during this time frame remain due after you’ve filed. It’s best practice to avoid paying off debts shortly before declaring bankruptcy if possible. Again, an experienced attorney can guide what counts as a preferential payment in your case. They’ll help you decide whether or not it makes sense to pay off certain debts before filing for bankruptcy.

When considering filing for bankruptcy, spending money is not necessarily off-limits; however, certain rules and regulations should be followed to ensure that all of your purchases are deemed appropriate by the court system.

By consulting with an experienced attorney who specializes in bankruptcies and following these two key rules—the recent luxury goods and services rule as well as the preferential payments rule—you can make sure that all of your purchases during this pre-bankruptcy period are compliant with both state and federal laws. That way, you can feel confident about moving forward with your financial plan without fear of incurring additional debt down the line.

If you are struggling with debt and considering bankruptcy in 2023, it’s important to contact an experienced bankruptcy attorney. For more information, contact the Law Offices of Robert M. Geller at 813-254-5696 to schedule a free consultation with an experienced attorney.


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