Posted: April 14, 2020


    There are circumstances where there is an immediate need to seek Chapter 7 bankruptcy protection, but the individuals pre-paid for a vacation before the bankruptcy is filed.  The question then is whether those individuals may go on that vacation after the bankruptcy is filed.  The most likely answer is yes.

     The first questions which must be asked are how the vacation was paid for and when it was paid.  If the vacation was paid using a credit card (which charge is sought to be discharged in the bankruptcy) then care must be taken to not file the bankruptcy within 90 days of that purchase.  Under Bankruptcy Code Section 523(a)(2)(C) , if a luxury item is charged within 90 days of the filing of the bankruptcy, the creditor (bank) has the right to seek an Order of the Bankruptcy Court that the charge in question was fraudulent (intent of not paying the debt) and hence not dischargeable.  The discharge is the Order of the Bankruptcy Court which states that you no longer owe your creditors money.  In fact, the whole point of Chapter 7 is to receive that discharge Order.  You must be extremely careful to make sure you are not filing your bankruptcy case within that 90 day window, if you charged luxury items.

     Next, it must be determined if the vacation is an asset which may be transferred.  Typically, a vacation is not transferable to a third party; the lodging and travel are unique rights to particular individuals.  In that circumstance, the Chapter 7 Trustee will have no ability to sell the vacation package on the open market as the trustee is bound by the same legal rights you had on the filing date.  Hence, if you may not transfer (sell) the pre-paid vacation, then the trustee may not sell it either.  If, however, you are in the unique circumstance of having the ability to transfer your vacation to a buyer (such as you rented a house for a week and there is no restriction on transfers), then you must beware.  The pre-paid vacation is then an asset which could be liquidated and the Trustee might be interested in liquidating (selling) the vacation package.  The most likely course would be that the Trustee would offer to sell you back the vacation at a reduced market rate, to reduce his legal costs of advertising and sale.  You may, however, be entitled to assert an exemption of the vacation asset, but you would need to do so only if it may be transferred.  

     Bankruptcy is a very complex legal process, with significant benefits for those people in need of its protection.  It is critical that you consult with an experienced bankruptcy lawyer to go over all of your options and to understand your rights.  Kirschenbaum & Kirschenbaum has over 45 years’ experience in dealing with all bankruptcy matters.  Please contact one of our attorneys today.



For assistance with all Bankruptcy matters, please contact us:

Ken Kirschenbaum, Esq.    (516)-747-6700 Ext. 301 or


Stacy Spector, Esq.    (516)-747-6700 Ext. 304 or