presumption of abuse in luxury goods and services

[baddebt]

How does the $550/90 day presumption of abuse work? Can a credit card company file a complaint citing presumption of abuse if there are more than $550 charged in 90 days? Do I have the burden of proof to show the charges were necessities if I go over $550? Do I have to explain each and every charge in an AP?
Will merchants not get paid if the credit card they accepted for payment is discharged in bk?
Thank you for your help.

[TEW]

I think you are talking about 3 difrent things here.
1. presumption of abuse is when you file chapter 7 and you have to much disposable income to do so.
2. If you charge more then $600 or purchase luxury goods and services within 90 days before you file it can be considered fraud.
3. if you pay a unsecured debt more then $600 in 90 days that is preferential payment.
It's best to plan your BK to avoid these problems.

[baddebt]

You are correct. I need to reword my question.

How does the $550/90 day presumption of nondischargeability law work (11 USC 523)? Can a credit card company use the presumption of nondischargeability law if there are more than $550 charged in 90 days? Do I have the burden of proof to show the charges were necessities if I go over $550? Do I have to explain each and every charge in an Adversarial Proceeding?

Will merchants not get paid if the credit card they accepted for payment is discharged in bk?

If I have two credit cards with the same creditor how does the $550 dollar limit work?

What are the difficulties I face if I defend myself in an adversarial proceeding without a lawyer?

Are there any reference books that answer my questions?

Thank you for your help.

[jktrading]

It would mean those debts would be non-dischargeable within 90 days of filing if they were considered luxury items. Yes, the credit card companies could certainly object, and if it was for luxury items within the 90 days of filing, then any judge would certainly rule they were non-dischargeable. I believe proving they were luxury items, would fall on the creditor. The presumption of fraud on you, would be AFTER the creditor proves they were luxury items within the 90 days before filing.

The rest of your BK would go on, no matter who objects. Credit card companies do not normally object, but you never know. I would think it would have to be for thousands and not hundreds for them to do so.

I myself waited 6-7 months from charging before filing, paying almost all my minimum payments up until I filed. I had a couple of 30 day lates out of 8-10 accounts. I realize some people don't see a BK coming as far ahead as I did, but some do. Even if you can't make the minimums, waiting for 6-7 months from charging is always preferable.

[JRScott]

Your balance doesn't matter, generally it doesnt matter if you are buying gas, food etc either. However it is best to stop using the credit cards adn wait 90 days to file.

If they were to object they'd have to go line by line on the charges and prove each was luxury for which they object to discharge. So if you've not you know ate at Emeril's straight for the last week, bought a TV, computer or other luxury you should be okay.