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Can you continue to spend after deciding to file Chapter 7?

You've made the difficult decision to file for Chapter 7 bankruptcy. You know that your financial life will change after this and won't be the same for awhile.

However, your credit cards haven't yet been cancelled. Should you make a few last purchases? Perhaps you should get that big flat-screen TV you've always wanted, take a trip abroad or buy an RV and drive the family up the coast to New England for one last big summer holiday before you have to seriously tighten your financial belt?

The answer to these questions in most cases is "No." Once you've hired a bankruptcy attorney, he or she will tell you to stop accumulating debt and to pay for everything with cash or from your checking account (assuming that you have sufficient funds in it) from here on out. Further, the bankruptcy court will look at your spending in the months prior to your filing when it determines what you can and can't write off.

By filing for Chapter 7 bankruptcy, you can eliminate most, if not all, of your unsecured debt, such as credit card debt. However, if a credit card company or other lender believes that you were racking up debt when you knew you couldn't pay it back, you may not be able to discharge that debt.

If you have gotten to a place where you need to file for Chapter 7 bankruptcy, your spending has clearly somehow gotten ahead of your ability to pay your expenses. Therefore, it's in your best interest to stop incurring any unnecessary debt. Your New Jersey bankruptcy law attorney can provide guidance on your spending and other financial issues as you prepare to file for bankruptcy.

Source: Bankrate, "Don't spend money before bankruptcy," Justin Harelik, accessed June 15, 2017

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At the law offices of William H. Oliver, Jr. & Associates in Toms River and Lakewood, New Jersey, we represent clients in Toms River, Neptune, Trenton, Middletown, Red Bank, Wall, Lakewood, Lakehurst, Manchester, Asbury Park, Old Bridge, Jamesburg, Barnegat, Forked River, Manahawkin, Ocean Township, Brick, Manasquan, Howell, Freehold, Hazlet, Bradley Beach, Brown Mills, Long Branch, Keansburg, Marlboro, Bayville, Beachwood, Whiting, Sayreville, South River, East Brunswick, Monmouth County, Ocean County, Middlesex County, Burlington County and Mercer County.