New York, NY asked in Bankruptcy for New Jersey

Q: Hi. Im halfway through filing for a chapter 7,can I use sezzle?I have an approval of $800 to use but dont want issues.TY

Edit: I did not apply for new credit. It’s available for me to use since I kept great payment history with them. I have an available 900$ to use. Not applying for new credit. I’ve hired my attorney but asked as he’s gone until next week. I am represented. Thanks!

I filed for bankruptcy chapter 13 in March due to rental arrears being owed but was approved for rental assistance as I was very sick and couldn’t work, so we will be converting my chapter 13 to a 7.

My question is this. I’ve always had a great relationship with sezzle, always paid on time and already approved to use 800$. I have the funds now that I’m working again and can pay, I actually need it for cleaning products, services I can pay with a sezzle card they provide and pay in 4 installments (again this isn’t just shopping. Things I need regardless for home) however I’m worried it’ll show up and they’ll dismiss my 7 if I use sezzle.

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3 Lawyer Answers
James L. Arrasmith
James L. Arrasmith pro label Lawyers, want to be a Justia Connect Pro too? Learn more ›
  • Bankruptcy Lawyer
  • Sacramento, CA

A: In your situation, it's best to consult with your bankruptcy attorney before making any financial moves, including using Sezzle or other "buy now, pay later" services. While Sezzle may not report to credit agencies, using credit or taking on new debt during the bankruptcy process can potentially complicate your case.

Here are a few things to consider:

1. Timing: If you use Sezzle before your Chapter 7 bankruptcy is filed, you may need to disclose this transaction to the court. If you use it after filing, it could be viewed as taking on new debt, which is generally not allowed during bankruptcy proceedings.

2. Dismissal risk: Taking on new debt during the bankruptcy process may be viewed as bad faith by the court, potentially leading to a dismissal of your case.

3. Trustee's role: The bankruptcy trustee assigned to your case will review your financial transactions, and any new debt or credit usage could raise questions or concerns.

Your best course of action is to discuss this matter with your bankruptcy attorney. They can provide guidance specific to your case and help you determine whether using Sezzle or any other form of credit is advisable given your current circumstances. In most cases, it's safer to avoid taking on any new debt or financial obligations until your bankruptcy case is resolved.

Timothy Denison agrees with this answer

1 user found this answer helpful

W. J. Winterstein Jr.
W. J. Winterstein Jr.
  • Bankruptcy Lawyer
  • Boyertown, PA

A: There is an express provision of the Bankruptcy Code that requires a bankrupt to get prior judicial approval for any extension of credit, e.g., to borrow money.

In addition, money loaned within ninety days of the filing of a bankruptcy is excepted from any bankruptcy discharge.

To the extent that you will be enjoying an extension of credit from Sezzle in your proposed use, and especially because you are already in a bankruptcy proceeding, yes, you have issues generated by that use.

In addition, at some point, Sezzle will be notified of both the bankruptcy filing and probably of issues around its transactions with you, and because of that, Sezzle may well suspend its relationship with you.

You are best advised to consult with experienced bankruptcy counsel in NJ about everything you propose to do. There are specific Bankruptcy rules and requirements that must be followed and they are somewhat different from most layman's usual understanding of applicable law. Your inquiry raises issues beyond your proposed use of Sezzle.

Timothy Denison agrees with this answer

Leonard R. Boyer
Leonard R. Boyer pro label Lawyers, want to be a Justia Connect Pro too? Learn more ›
  • Bankruptcy Lawyer
  • Clifton, NJ
  • Licensed in New Jersey

A: If you are not represented by an experienced Bankruptcy attorney, then you need to retain one. You should NEVER seek new credit if you have filed a Bankruptcy, but exactly what is or has happened is not at all clear from your question/statement. Good luck.

Timothy Denison agrees with this answer

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