One of the common questions asked when an individual is filing for bankruptcy is if it is fraud to use a credit card during bankruptcy. If you have found yourself asking this question, you must understand the rules that pertain to credit card use before and during your bankruptcy filing.
Cash Advances
If you obtain cash advances from any one creditor within 70 days of filing your bankruptcy petition that total more than $825, this debt becomes a non-dischargeable debt in your bankruptcy filing. For this reason, it would be wise not to consider taking out a cash advance on one of your credit cards to pay your bankruptcy attorney fees or another creditor.
Debts for Luxury Goods and Services
The law views obtaining more than $550 in debt on any one credit card for luxury items or services within 90 days of filing for bankruptcy as fraud. Therefore, if you rack up these charges for luxury items or services, be prepared to have them survive your bankruptcy.
When Recent Debt Was Not Intended to Be Fraud
The bankruptcy courts are not fond of individuals taking on debt just before filing for bankruptcy and consider it fraud. Unfortunately, some people do take on debt with the intent of never paying it back. Others, however, use cash advances or credit cards in tough times to keep food on their table or a roof over their head. Bankruptcy judges understand this and may consider these types of situations as non-fraudulent on a case-by-case basis.
Get Legal Advice from an Experienced Bankruptcy Attorney
It is highly recommended that if you are considering bankruptcy or have questions regarding the laws surrounding bankruptcy, that you seek immediate legal advice. A competent and experienced bankruptcy attorney can answer your questions and counsel you on your legal rights when it comes to filing for bankruptcy.
