Christmas & Credit Card Debt | Summary and Q&A

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December 18, 2017
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Consumer Warrior
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Christmas & Credit Card Debt

TL;DR

Using credit cards for luxury purchases within 90 days of filing for bankruptcy can cause issues in the bankruptcy process.

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Key Insights

  • πŸ’³ Using credit cards for luxury purchases prior to filing for bankruptcy can lead to objections from credit card companies.
  • πŸ‘¨β€πŸ’» The bankruptcy code does not provide a clear definition of luxury items.
  • πŸ’Ό Essential household expenses are generally considered acceptable and do not cause problems in bankruptcy cases.
  • πŸ’Ό Objections to specific charges in bankruptcy cases are not common occurrences.
  • πŸ’³ It is recommended to cease credit card use once the decision to file for bankruptcy is made.
  • 🀝 The podcast is sponsored by the Consumer Warrior Project, offering assistance and resources for consumers dealing with debt problems.

Transcript

(upbeat rock music) - Hey everybody, welcome back to the Consumer Warrior Podcast. This is the podcast that's dedicated to helping you with your big debt problems. If you're just dabbling in debt, this isn't the podcast for you. We take big problems like repossession, debt collection lawsuits, foreclosure, bankruptcy, and all the other horrible thi... Read More

Questions & Answers

Q: What are the potential consequences of using credit cards for luxury purchases before filing for bankruptcy?

If you purchase luxury goods worth more than $675 within 90 days before filing for bankruptcy, those specific debts may not be discharged. Credit card companies can object to these charges.

Q: How often do credit card companies raise objections to specific charges in bankruptcy cases?

In most cases, the creditor needs to raise the issue for those charges to be deemed nondischargeable. This does not happen frequently, except in cases of extreme abuse of the system.

Q: Are essential household expenses exempt from the luxury goods rule?

Yes, expenses like groceries, gas, and diapers are considered reasonable and necessary for households. You are unlikely to face any issues if you use your credit cards for these purposes.

Q: Should I continue using credit cards if I plan to file for bankruptcy?

It is generally advised to stop using your credit cards once you decide to file for bankruptcy, unless it is an absolute emergency. Additional debt can lead to complications in the bankruptcy process.

Summary & Key Takeaways

  • The podcast discusses the implications of using credit cards for luxury purchases if you plan to file for bankruptcy in the future, as there may be objections raised by credit card companies.

  • The bankruptcy code states that if luxury goods worth more than $675 are purchased within 90 days before filing for bankruptcy, those specific debts may not be discharged.

  • While the bankruptcy code does not provide a clear definition of luxury items, essential household expenses like groceries and gas are generally considered acceptable.

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