Cash Advances And Luxury Items Can Be Exceptions To New Jersey Bankruptcy Discharge

If the debtor incurred certain debt prior to the bankruptcy filing, which appears to be obtained by fraud, each creditor may file a complaint with the bankruptcy court requesting that such debt be excluded from the discharge. Typically, if a creditor can prove in court that at the time the debt was incurred the debtor had no intention of paying the debt, such debt will be excluded from discharge. If the court determines that such debt was obtained by fraud and thereby excluded from discharge, the creditor will have the right to pursue the debtor for the money owed, as if no bankruptcy case was filed.
Prior to 2005, the following type of debt was presumed to be excluded from discharge:
a. consumer debt for luxury goods and services, incurred from a single creditor, totaling more than $1,225, within 60 days, prior to the bankruptcy filing; and,
b. cash advances for consumer debt, incurred from a single creditor, totaling more than $1,225, within 60 days, prior to the bankruptcy filing.
In 2005, Congress modified this bankruptcy code section, to establish that the following transactions are presumed to be excluded from discharge:
a. consumer debt for luxury goods and services, incurred from a single creditor, totaling more than $500.00, within 90 days prior to bankruptcy filing; and,
b. cash advances for consumer debt, incurred from a single creditor, totaling more than $750.00, within 90 days prior to the bankruptcy filing.
Please note that the presumption of discharge does not mean that such debt is automatically excluded from discharge, as the creditor must prove such allegations in court. Also, a creditor has the right to file a complaint alleging fraud, in connection with any type of debt that was incurred at any time.
Robert Manchel, a bankruptcy lawyer in New Jersey, can be reached at 1 (866) 503-5655 to discuss how bankruptcy protection could be applied to your personal situation.