Before you file bankruptcy, it’s important to understand that while you should be able to eliminate most of your debts, you could be on the hook for some of your bills. For example, bankruptcy will not get rid of alimony, child support, or court restitution. And it’s so hard to convince a court to discharge student loans, they might as well just be classified as non-dischargeable.
Another example of debts that you can’t get rid of are debts for luxury goods or services that were incurred within 90 days of filing bankruptcy.
So, what is a luxury good or service? Under Bankruptcy Code Section 523(a)(2)(C)(ii), a luxury good or service “does not include goods or services reasonably necessary for the support or maintenance of the debtor or a dependent of the debtor.” So, medical services, car repairs, or food, clothing, and shelter are obviously not included in this definition. (Unless the medical service is for hair implants or botox, I would guess.)
Items such as big screen televisions, vacations to Disneyland, or a video camera are some examples of luxury goods.
What happens to these debts? The creditor can object to a discharge of these purchases and you’ll stay on the hook for them afterwards. The rest of your dischargeable debt, however, will be eliminated.
If you have any questions about whether certain debts will be discharged in bankruptcy, you should talk with a Colorado bankruptcy attorney.