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Planning to File for Bankruptcy: Can I Still Take a (Pre-Paid) Vacation?

Can I Take A Vacation Before I File For Chapter 7 Bankruptcy?

If you are in the midst of or are planning on filing bankruptcy soon, there are certain behaviors you should not partake in. As an example, for 90 days prior to filing your bankruptcy petition, it is recommended not to pay back any personal monies that have been loaned to you. By doing so, your bankruptcy trustee will scrutinize those payments and will likely name them “preference payments.”

What that means is that you favored some creditors over others in regard to paying back. In bankruptcy court, that is considered dishonest. Furthermore, all monies paid back in the 90 days prior to filing your bankruptcy petition can be recovered as to allow it to be split evenly between all your creditors.

Do not go nuts using your credit cards with the belief that “why not? The debt will be erased anyway.” This type of activity is called bankruptcy fraud and your bankruptcy case will be dismissed without your debts being discharged when the fraud is discovered.

If at all possible, in the weeks and months leading up to your bankruptcy petition filing date, avoid getting married. Plan your wedding day around your bankruptcy discharge date. This is particularly true if your wife or husband make a decent wage. By marrying her or him prior to filing bankruptcy, when determining whether you are capable or not to pay back your debts, the court will consider your joint income.

The most important thing you want to avoid when getting ready to file a bankruptcy petition is probably lying to your bankruptcy attorney. In fact, do not lie to the trustee either. Immediate dismissal of your case can result from making a false claim in regard to a bankruptcy filing. This could mean that you are unable to file bankruptcy again on the current debts you are holding.

One of the interesting questions that clients have raised recently is if a potential bankruptcy debtor should or can still take a vacation in the 90 days prior to filing the petition, and/or during the case timeline. It may seem like an easy answer to this question would be not to do it; however, it is actually fine as long as you can easily prove that the vacation was already paid for, and you had no financial difficulties at the time of the payment.

Often times, pre-paid vacations are non-refundable and booked long in advance, which for most individuals means that the vacation was paid for when they had a much brighter financial outlook. Situations in an individual's life can quickly change. In the past, you may have regularly slipped money into your savings, been current on your bills, and were able to buy a luxury vacation. However, in the blink of an eye, you are now in an entirely different situation.

If the vacation was pre-paid, you can take it. Provided it was NOT paid for in the 90 days leading up to your bankruptcy case filing and you have the ability to prove that when you paid for the vacation, your finances were stable. Take the vacation, but do not use any credit cards to pay for extras while on it, because all of those expenses will be questioned during your bankruptcy court case.

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