Many people want to get rid of credit card debt when they file for bankruptcy. That’s totally possible. But should you continue to use your credit card when you know you’re going to file? Not only should you, can you?
Attorney Jen Koss explores credit card use and bankruptcy in the helpful video below.
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Is Credit Card Use OK?
People often ask me if they can continue to use their credit cards up until they file a bankruptcy. The short answer is, “No.”
Almost all credit card debt can be taken care of or discharged in a bankruptcy.
The only exception for that is debt that has been incurred with fraudulent intent.
Credit Charges & Fraud
Making credit card purchases just before filing a bankruptcy, with knowledge that you’ll soon file, will be considered fraudulent intent by the court. If that occurs, the court will not allow you to discharge that debt.
Many creditors have attorneys who will flag that kind of activity just before filing bankruptcy. The creditor simply has to file a complaint with the court and you will remain responsible for that debt.
It is not a guarantee that the creditor will review and notice your recent activity prior to filing the bankruptcy, but you should not count on their failure to do so.
What to Do if You’re Accused of Fraud
You can, of course, try to show that you did not intend to defraud the creditor, however, this can be hard to do, especially if your statement shows luxury or high-priced items. The court would see right through those purchases and consider the fraud presumed.
When to Stop Using Your Credit Card Before a Filing
This is why we ultimately recommend an extended period of no credit card usage prior to filing, usually at least about 90 days.
This way you do not file a bankruptcy only to come out on the other side still having credit card debt.