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Bankruptcy Abuse – Spending

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About Ralph A. Ferro Bankruptcy Lawyer

Bankruptcy Abuse – Spending

Chapter 7 Abuse Debts

Written and Verified by Ralph A. Ferro, Jr., Esq.

Abusive spending is not a circumstance to file for Chapter 7 bankruptcy.  You cannot abuse bankruptcy rules with excessive spending.   A wife’s spending was not considered discretionary spending   https://www.investopedia.com/terms/d/discretionary    A wife’s spending spree leads to a debt that is not discharged in bankruptcy.


  • Husband and Wife had a joint account with a limited credit line.
  • Bank made error and increased the allowable credit limit to $100,000.
  • Wife took full advantage of the situation and began to go on a spending spree; charging in excess of $80,000.
  • Husband had no knowledge of the situation at the time.
  • Wife handled all the finances.
  • When the bank demanded this money be paid back through a payment plan, the wife informed the husband of the situation.
  • Couple filed for Chapter 7 bankruptcy.
  • Bank filed an adversary proceeding.

Court Ruling

  • Although the bank made an error in the credit limit, the bank was not responsible.
  • The wife was fully aware of the situation and took advantage; regardless of the fact that the husband was unaware.
  • Debtor-wife’s obligation to the bank is a non-dischargeable debt.
  • Exploiting a situation and knowingly taking advantage is unacceptable to a Bankruptcy Court.
  • Debt was not allowed in bankruptcy.

Remember not all debts are dischargeable in Chapter 7 bankruptcy.   https://njbankruptcylawfirms.com/chapter-7-bankruptcy-new-jersey/  Abuse of the bankruptcy rules and code is not acceptable to the Bankruptcy Courts.

I remind clients that honesty and coming to the bankruptcy court in good faith is essential.   You cannot have excessive spending in bankruptcy.    The Debt will not be dischargeable.    Call me today if you would like a free bankruptcy consult – I am here to help you with your future financial success.  Contact Me