Without a doubt, struggling financially to the point of considering bankruptcy is stressful. You may need a break. But can you take a vacation if you plan to file for bankruptcy in the near future? Should you? And how can you avoid common problems? Here's what every debtor needs to know.
When to Consider a Vacation
In general, there are two main types of vacation that are less likely to cause problems with the bankruptcy court. The first is a vacation that was paid for in advance, generally during a time before you were planning on bankruptcy. If you can't get back the money already paid out, it doesn't impact your bankruptcy assets much at this point.
The second type is a vacation for necessary reasons other than just pleasure. This may be a trip to visit an ailing parent or grandparent, a trip primarily for business purposes, or for a funeral, for instance. The bankruptcy trustee is authorized to consider the circumstances as well as how you conducted yourself financially during the vacation.
When to Skip a Vacation
The worst type of vacation you can take at this point is one that's paid for on credit cards, primarily for personal pleasure, and is taken very close to your bankruptcy filing date. The bankruptcy trustee may deem this as bankruptcy fraud.
Bankruptcy fraud encompasses any activities the claimant makes with the intention — or even the accidental result — of defrauding the court and creditors by reducing assets or increasing dischargeable debt. And a luxurious vacation could be the perfect example of this. If the trustee finds that you committed fraud, it may result in the debt being declared non-dischargeable or even having your case terminated.
How to Avoid Trouble
If you decide to take a vacation shortly before filing, take a few proactive steps to avoid problems later.
Consult with your bankruptcy attorney first and follow their advice. Avoid any extravagant purchases or services. Keep receipts in case you need to justify your expenses to the trustee. Use cash or debit cards rather than credit cards. And do not miss any bankruptcy deadlines because you're gone.
Where to Start
Once bankruptcy protection is a likely route for your situation, consult with a law firm in your state. They will help you avoid accidental or intentional bankruptcy fraud, obtain the maximum possible discharge, and get through the process with as little stress as possible. Call today to learn more.