How long before filing bankruptcy are you supposed to stop using the credit cards?


I am considering filing for bankruptcy because I have recently lost my job, and have no means to repay my outstanding debts. I can hardly cover my daily expenses without my credit card. I know I need to stop using my credit card before filing for bankruptcy, but how long should I wait before filing after I do stop using it?


When you file for bankruptcy, your creditor will examine your recent financial transactions looking for signs of fraud. In this context, fraud means that you ran up bills with no intent to repay them, either because you knew you were going to file for bankruptcy or because you lacked the financial means to make good on the charges.

If you run up more than $725 (as of April 1, 2019) in debt to any one creditor for luxury goods or services within 90 days before you file for bankruptcy, the law will presume that you had a fraudulent intent. Luxury goods aren't necessary for everyday life, such as expensive shoes, video games, or vacations. Necessary goods and services, such as rent, utilities, and food aren't included in the presumptive fraud amounts.

The same is true for cash advances from any one creditor of more than $1,000 (as of April 1, 2019) during the 70 days before you file for bankruptcy. In either case, if the creditor objects and files an adversary proceeding (lawsuit) during your bankruptcy case, you will have to prove that you didn't commit fraud or those charges will survive your bankruptcy.

Learn more about how a creditor objects to a debt discharge.

Even if you don't fit neatly into either of these categories, the credit card issuer might object and claim that your credit card debt shouldn't be discharged if:

  • you run up charges shortly before filing
  • you continue to use the card after receiving past due notices
  • you greatly increase your spending in the months before filing
  • you continue to use your card after deciding to file (for example, after you meet with a bankruptcy attorney), or
  • you use the card in a way that's intended to circumvent your spending limit (for example, by making multiple charges for smaller amounts that don't have to be precleared by the merchant).

If the creditor is successful, you'll remain obligated to pay for the debt. Because of the high cost associated with defending lawsuits, most debtors faced with an adversary proceeding settle with the creditor by agreeing to repay the debt, sometimes at a reduced amount.

Because of these rules, the safest course of action is to stop using credit cards as soon as you have decided to file for bankruptcy, and certainly to avoid luxury charges or cash advances that exceed the limits set out above in the few months before you file.

Learn more about other debts that aren't dischargeable in bankruptcy.

Updated: March 27, 2019

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