Debtor’s Discharge denied by the Court in this Case of excessive pre-filing credit card charges.

Here, the debtors incurred nearly $44,000 of charges on their American Express charge card within a two month period. The account statements indicated that during this two month period, charges were placed for eight items of jewelry, including six diamond rings and two ten karat bracelets.

Debtors’ bankruptcy schedules failed to either list the jewelry or explain its disappearance. Under the Bankruptcy Code, debtors may be denied a discharge in bankruptcy if they either conceal assets or fail to adequately explain the disappearance of assets.

Debtors testified that they never placed the orders for the jewelry and never received the jewelry. Debtors argued that there was no jewelry missing since they never received the items. All the orders were delivered to debtors by Federal Express, who was able to verify the deliveries were made to either debtors’ residence or debtors’ daughter’s residence.

The court also reviewed debtors’ American Express account history for one year preceding the bankruptcy. The court found that debtors had charged more than $102,000 during that period for fine china, clothing, perfume and automobile accessories.

Debtors had also submitted three payments of $24,508 to American Express, all of which were returned for non-sufficient funds.

The court denied debtors discharge in bankruptcy due to debtors apparent concealment and/or disappearance of assets. In re Lorenzato, 147 B.R. 346.

Author: Charles R. Harroun, Attorney at Law