Question about luxury items

[anonymoos123]

I am considering Ch 7 however I have purchased Luxury items within the past 90 days (alcohol, other things) I have also had a couple $500+ purchases. If I wait until these purchases are more than 90 days out can I still be forced to repay? For example, If i file 91 days from today can the court go after these purchases or is that 90 day mark a legal thing they can't go past.

[justbroke]

What were these other things? Alcohol is not really a luxury if you have a dependency and, in my humble opinion, doesn't rise to the level of extravagance. Now, if you're drinking a bottle of 50 year old scotch each day... that is probably extravagant. Luxury items typically means things like furs, jewelry, jet skis, and other things like that; think "real" luxury and really extravagant. Luxury good typically means things that are not necessary for the health or welfare of your family, but it must also mean pretty much REALLY unnecessary. Again, a case of beer is not extravagant but a bottle of 35 Year Old bottle of Yamakazi would be seen as extravagant.

Remember, this "luxury" exception only gives the presumption that it's non-dischargeable (if it's a luxury). The single creditor, with whom you spent over the threshold in the 90 days preceding filing, would need to file a claim and start an adversary proceeding (AP) which is a lawsuit within the bankruptcy.

[anonymoos123]

What were these other things? Alcohol is not really a luxury if you have a dependency and, in my humble opinion, doesn't rise to the level of extravagance. Now, if you're drinking a bottle of 50 year old scotch each day... that is probably extravagant. Luxury items typically means things like furs, jewelry, jet skis, and other things like that; think "real" luxury and really extravagant. Luxury good typically means things that are not necessary for the health or welfare of your family, but it must also mean pretty much REALLY unnecessary. Again, a case of beer is not extravagant but a bottle of 35 Year Old bottle of Yamakazi would be seen as extravagant.

Remember, this "luxury" exception only gives the presumption that it's non-dischargeable (if it's a luxury). The single creditor, with whom you spent over the threshold in the 90 days preceding filing, would need to file a claim and start an adversary proceeding (AP) which is a lawsuit within the bankruptcy.

I consider myself an alcoholic but I haven't been to any meetings or anything. But anyway, I probably spend $50-$80/ish per week on alcohol. The individual items were a computer I financed and a tablet I financed.

Regarding the past 90 day thing: Lets say I have something considered "luxury" or above threshold. If I am PAST the 90 day mark am I safe or is there still chance for a creditor to file a claim?

Thanks for the quick response.

[despritfreya]

You misunderstand. 11 USC 523(a)(2)(C) states:

(i) for purposes of subparagraph (A) –

(I) consumer debts owed to a single creditor andaggregating more than $650 for luxury goods or service sincurred by an individual debtor on or within 90 days before the order for relief under this title are presumed to be nondischargeable; and

(II) cash advances aggregating more than $925 that are extensions of consumer credit under an open end credit plan obtained by an individual debtor on or within 70 days before the order for relief under this title, are presumed to be nondischargeable; and

(ii) for purposes of this subparagraph –

(I) the terms "consumer", "credit", and "open end credit plan" have the same meanings as in section 103 of the Truth in Lending Act; and

(II) the term "luxury goods or services" does not include goods or services reasonably necessary for the support or maintenance of the debtor or a dependent of the debtor. . .

This provision has nothing to do with the court. It has to do with a creditor’s ability to ask the court to find that the debt owed is non-dischargeable. The creditor still has to TIMELY file a complaint against the debtor. If it fails to TIMELY file a complaint the debt is discharged.

This provision shifts the burden of proof from the creditor to the debtor. Within the 90 days the debtor must prove that his/her actions were not fraudulent. Outside of the 90 days the burden is on the creditor to prove that the acts of the debtor were fraudulent.

If you purchased luxury goods (not sure alcohol is a luxury item) waiting 91 days will put the burden on the creditor should the creditor choose to file a timely complaint.

Des.

[justbroke]

anonymoos123 my friend despritfreya lays it out in a way that I hope is better for you to understand. It's the creditor that needs to file such a complaint (adversary proceeding) and prove that you purchased "luxury" goods. As des also wrote, I don't think alcohol is a luxury either unless it's some serious liquor (and by serious, I mean things like that $2,500 bottle of scotch, not to say a $1,000 bottle wouldn't bee a luxury; I use that for illustrative purposes only).

The likelihood of a creditor filing is anyone's guess, but a creditor is not likely to sue for a relatively small amount such as <fill in made up number here> (but I'm thinking $2,000 or even higher). There's a cost to the creditor to file and prosecute a complaint.

As for the laptop and tablet, the creditor probably has a purchase money security interest (PMSI) in the purchase. A PMSI means that this is a secured debt. I have not seen many of these complaints over PSMI or secured property (when you keep it and continue to pay). That doesn't mean that they don't exist or can't happen. It's just less likely. Search the threads for "Best Buy" and "Bass and Associates" and you'll see what they try to do in Chapter 7s where you choose surrender. (I don't know why anyone would choose "reaffirm" on electronics, but that's my personal opinion.)