Can I Buy Household Appliances Before Filing for Bankruptcy?

Should you buy a washer dryer before filing for bankruptcy? The bankruptcy process has the goal of giving individuals the opportunity for a fresh financial start. In years gone by, it was common for attorneys to encourage people to spend up their credit card debt before filing. However, the changes to bankruptcy law in 2005 have made it more difficult for people to make significant purchases like this prior to filing bankruptcy. Before you make big purchases like buying appliances, be sure you speak with your attorney about them.

Why You Should Be Concerned

When it comes to making significant purchases, such as buying household appliances, prior to filing for bankruptcy, it is critical to understand how the court views such moves. In short, the court’s job is to take any assets you have, including any type of cash on hand, and liquidate it to repay creditors. You are allowed to keep some items, such as those protected under your state’s bankruptcy exemptions. However, there are a few more things to keep in mind.

• You should not make purchases on credit in the six months leading up to filing for bankruptcy, especially if you know you are not going to repay that debt. Do not purchase appliances on a credit card, for example, that you have listed in your bankruptcy documentation. 

• Determine what your exemptions are. Most states do protect appliances up to a certain value. Learn what that value is prior to making purchases. 

• The court will ask you to verify any large purchases you made in the 90 days leading up to your filing bankruptcy. The court will question big purchases, such as those over $600, The court will then determine if it was necessary for you to spend that much and if those assets are protected.

Before making any purchases prior to filing for bankruptcy of any assets, speak to your attorney about the potential repercussions of doing so. In some situations, the court will strip your appliances from you if they are not otherwise protected.

Speaking to an Attorney

It is critical to speak to an attorney about your assets and exemptions under your state’s laws. In many cases, your attorney can help move non-exempt assets to exempt assets, but only in situations where the law allows. Your attorney can also provide you with advice on making these significant purchases. Ask before you buy a washer dryer before filing for bankruptcy.