What Are Considered Luxury Goods in Bankruptcy?

Luxury goods refers to any items that are not considered essential to one's subsistence. Luxury goods are usually nondischargeable items if purchased within a certain time period before filing for bankruptcy. Although federal law and federal courts govern bankruptcy cases, many issues like dischargeable debt are covered by varying supplementary state laws.

Why Are Luxury Goods Important?

When a person files for Chapter 7 bankruptcy, the intention is to have all of his debt wiped out. Yet any items deemed to be luxury goods that were purchased within a certain amount of time before the bankruptcy filing will not be considered a dischargeable debt.

Variation Among States

Each state varies in terms of which items they consider to be luxury goods. Each state also dictates a different amount of time before declaring bankruptcy in which luxury goods purchased will not be considered dischargeable debt.

Common Items Considered Luxury Goods

Items such as personal computers, coffeemakers, recreational vehicles, floral arrangements, jewelry, fragrances and musical instruments can all be considered luxury goods depending on the state you’re in.

The Reason for Knowing What Your Luxury Goods Are

It is important to know which of your possessions are considered luxury goods because if any of them were purchased within the state-mandated time period, usually between 60 and 90 days before filing, they will not be considered dischargeable debt.

Consult a Lawyer

Since what is to be considered a luxury good varies a great deal from state to state, a lawyer should be consulted. Often, luxury goods are defined by the specifics of a situation and can be difficult to discern.