What is definition of "Luxury" Items?

[Kirby]

Greetings - am saving to file Chap 7 but in the meantime need a new water heater, vacuum cleaner, and want to give my expectant daughter and son-in-law a crib. Have visions of repo man going to their house and dismantling the crib. What constitutes "luxury items"? Thank you for your help.

[keepinitreal]

Well, a crib that costs $1750 would be a luxury item, while a crib that costs $115 would not be.

Just an example.

[newbie2]

Greetings - am saving to file Chap 7 but in the meantime need a new water heater, vacuum cleaner, and want to give my expectant daughter and son-in-law a crib. Have visions of repo man going to their house and dismantling the crib. What constitutes "luxury items"? Thank you for your help.

If you're going to pay cash buy you generally don't have anything to worry about. Now if you're going to use your credit cards for one last hurrah then I would reconsider (since you did state you have every intention of filing bankruptcy)

[frogger]

You'll know it when you see it, just as we all do. Since you are filing however, you'll need to pay cash for these.

[Kirby]

Thanks everyone. The comment by newbie2, "...if you're going to use your credit cards for one last hurrah..." gave me pause - do people really go wild just before filing BK and if so, aren't the consequences especially harsh?

[Kirby]

Thank you everyone for your kind replies. Newbie2 brings up an intriguing point - "...if you're going to use your credit cards for one last hurrah..." - do people really go wild charging up their credit cardes just before filing BK, and if so, aren't the consequences especially harsh?

[minan]

My understanding is that you should stop using all credit cards at least 6 months prior to filing. Any purchases made have to explained to the trustee.

I'm thinking about filing in July and have charges on a carecredit card for dental services when I had a work done for an dental issue (caused tooth to fall out and bone reduction). This was done in Jan/Feb timeframe. I'm worried about this even though there are dental records etc that I needed to get these work done otherwise I would have been on the road for the peridontal disease spreading and causing problems for my other teeth.

So the advice on here is to do everything with cash and stop using all cards.

[Kirby]

Thanks minan - I hear everything from 60 days to 6 months that I shouldn't use credit cards before filing. I don't have much of a choice on charging the water heater to a credit card as I can't afford to pay cash, I have only a little more choice on buying the new vacuum cleaner with a credit card - it's a hygiene issue fer Pete's sake - but am gritting my teeth over a potential future inquisition about these kinds of purchases. The crib - how would the BK court view that purchase if I used a credit card?

[SeattleBK]

I bought a $199 futon that I use as a bed approximately 2 and a half months before I filed. I also bought a blanket around that same time.

I also bought everyday needs, like food and, toiletries approximately about 1 and half months before I filed.

Also, I use to have a website, that I never did get started and forgot about and the website company did a automatic charge on an account I BK'd about a couple weeks before my BK for around $15. I was worried about that, but the bank never said anything about it.

[newbie2]

Thanks minan - I hear everything from 60 days to 6 months that I shouldn't use credit cards before filing. I don't have much of a choice on charging the water heater to a credit card as I can't afford to pay cash, I have only a little more choice on buying the new vacuum cleaner with a credit card - it's a hygiene issue fer Pete's sake - but am gritting my teeth over a potential future inquisition about these kinds of purchases. The crib - how would the BK court view that purchase if I used a credit card?

The crib is a gift, so that may be called in to question. (Have to disclose gifts on your BK petition) Worse case though you could be asked to pay for the crib.

[backtoschool]

Greetings - am saving to file Chap 7 but in the meantime need a new water heater, vacuum cleaner, and want to give my expectant daughter and son-in-law a crib. Have visions of repo man going to their house and dismantling the crib. What constitutes "luxury items"? Thank you for your help.

None of the items you mentioned are "luxury" items, but none of them can be paid for with your credit cards if you are intending on filing soon. If you are filing in the next 90 days and have talked to any lawyer for a consultation, you cannot use the cards or you may be subject to the creditor objecting to the discharge of the item in your bankruptcy. If you charge the water heater and file in the next couple of weeks, expect the credit card company to object to the discharge of that expensive item. It is not just luxury items that are contested, it is any item purchased on credit when you know you are insolvent that can be contested. Of course you may get lucky and not have the charge objected to, but you will be at some risk of an objection if you file soon after making that large purchase.

[Kirby]

Avoiding scrutiny

Thanks Seattle, newbie, and backtoschool. So to try to avoid scrutiny, it sounds like I should wait three months to file. Will comb the other threads but still appreciate anyone's input. This place is great.

[backtoschool]

Thanks Seattle, newbie, and backtoschool. So to try to avoid scrutiny, it sounds like I should wait three months to file. Will comb the other threads but still appreciate anyone's input. This place is great.

90 days is the legal presumed insolvency period in bankruptcy. To avoid a creditor claiming that your large purchase was fraudulent, and filing an AP, you should not make any large purchases up to 90 days before you file. It is presumed in bankruptcy that you know you are insolvent up to 90 days before filing. This is a legal definition that requires no proof of fraud on behalf of the creditor. So, if you are going to make a large purchase like a water heater, and want to avoid a possible AP by your credit card company in regards to that purchase, then wait 91 days or more after the purchase to file or you will be at risk for an adversary proceeding.

Of course like I said above, you may get lucky, etc, and the creditor may not file an AP against you. As with anything ymmv.

[bebegirl]

anything over $1000.

I have used my credit cards in the last 6 months, but not on anything over 1,000 dollars will they still question the charges?