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Bankruptcy court rules woman can discharge recent debts

Michigan consumers who have recently put charges on their credit card might wonder whether they would be able to discharge them in bankruptcy. A West Virginia bankruptcy court held that a woman who took a cash advance in the amount of $7,993 two months before filing for Chapter 7 bankruptcy could have that obligation discharged.

The bank argued against this. The Bankruptcy Code says that services charged within 90 days of filing for bankruptcy or luxury goods totaling more than $675 could not be wiped out in bankruptcy if the charges were to a single lender. However, the court argued that the bank did not prove that luxury goods were purchased. It only found that the woman had spent $420 on boots and a computer game. According to the bank, an additional charge of $183 from Kohl's was not necessarily a luxury good and could be attributed to the woman's efforts to replace household items lost in a fire.

The court held that the expenses were reasonable. According to the judge, the woman did not engage in deception and intended to repay the charges.

People who are struggling with debt might wonder what their options are and whether they can file for bankruptcy. An attorney might be able to review the available options for debt relief. Consumers might be eligible for a Chapter 13 bankruptcy if they have a regular source of income and submit a proposed repayment plan that is approved by the court. One advantage of filing for bankruptcy is that it puts at least a temporary stop to creditor harassment and to further collection activities.

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