Can I use my credit card before I file for bankruptcy?

Yes, you can use a credit card before bankruptcy for food, utilities, rent, and other necessities you can’t afford. But if you’ve decided to file for bankruptcy or know you’re unable to pay the bill when it’s due, you’ll want to do the following to avoid committing fraud:

• use credit cards for essential items only
• avoid charging luxury goods and services, and
• don't take out cash advances.

Below, you'll learn why buying things on credit or taking out cash advances when you're insolvent and can't pay the bill is considered fraud, the dollar amounts and time limits that trigger a fraud presumption, and the exception that lets you keep charging necessities right up until you file.

When Can I Use a Credit Card Before Bankruptcy?

You can always use your credit card to charge basic things you and your family need to survive and maintain your health and welfare. Think necessities, like groceries, diapers, gas to get you to a job interview, emergency repairs to a car or furnace in the winter, and baby food and formula. Buying inexpensive, seasonally appropriate clothing on credit, or paying necessary utilities or rent, won't run afoul of bankruptcy law, either.

It's still a good practice to stop using credit cards for anything beyond necessities once you decide to file for bankruptcy. At that point, you know you're insolvent and don't have the funds to repay new charges, and buying things on credit that you can't or don't intend to pay for is fraud. (11 U.S.C. § 523(a)(2).)

Keep good records of your purchases and your financial situation at the time. If someone questions the charges during your bankruptcy case, you'll want to be prepared to prove that you or your family needed the items and didn't have another way to pay.

What Counts as a Luxury Purchase Instead of a Necessity?

Anything you don't need will likely be considered a luxury item. Luxury items can include jewelry, dinners out, electronics, furniture, unnecessary clothing and shoes, plane tickets, tickets to sporting events or concerts, and even holiday gifts. You won't receive bankruptcy protection for these kinds of charges, and the closer you make them to your filing date, the more problematic they'll likely be.

Cash advances are treated the same way. Taking cash out against your credit line shortly before filing raises the same fraud concerns as charging luxury goods, because you're extracting funds you likely can't repay.

What Are the Presumptive Fraud Amounts in Bankruptcy?

If you charge luxury goods totaling more than $900 from a single merchant during the 90 days before filing for bankruptcy, the lender won't need to prove you intended to commit fraud—the bankruptcy court will automatically presume wrongdoing in what's known as a “presumptive fraud” case. The bankruptcy court will also presume fraud if you take out a cash advance totaling more than $1,250 during the 70 days before filing. (11 U.S.C. § 523(a)(2)(C); amounts apply to cases filed between April 1, 2025, and March 31, 2028, and adjust every three years.)

The presumption of fraud makes it much easier for a creditor to win a case asking the court to declare the debt “nondischargeable.” When a creditor wins, you remain responsible for paying the nondischargeable debt. You can't erase it in bankruptcy.

What Happens If You Commit Presumptive Fraud Before Bankruptcy?

Nothing happens if the lender doesn't object to presumptive fraud. The bankruptcy discharge will erase the charges along with your other qualifying debts. But suppose the creditor files and wins a bankruptcy lawsuit known as an “adversary complaint.” In that case, you'll remain responsible for the charges after your Chapter 7 case closes, or you'll need to pay what you owe through your Chapter 13 plan.

Can I Max Out My Credit Card Before Filing for Bankruptcy?

It depends on the circumstances. Many people find themselves financially insecure after relying on credit cards to make ends meet each month. If this fits your situation, you likely maxed out your credit limits long before considering filing for bankruptcy and probably won't run into a problem.

However, you won't want to intentionally max out credit cards without intending to pay the bill after deciding to file for bankruptcy. If the charges don't qualify for the necessity exception, your creditor might view maxing out your cards as fraudulent. Learn about erasing bills you forget to list in your bankruptcy case.

Should I Delay Bankruptcy to Avoid Credit Card Fraud?

Waiting out the 90-day presumptive period probably won't solve the problem. Timing a bankruptcy filing doesn't fix every fraud issue. A creditor who wants to recover charges made more than 90 days before your filing can still bring a general fraud case, even without the benefit of the presumption.

The simplest way to avoid both types of fraud claims is to stop using credit once you're insolvent or once you're within 90 days of filing. But if you absolutely must charge something, remember the exception for necessary purchases still applies.

Can I Pay My Bankruptcy Lawyer With My Credit Card?

No, your bankruptcy lawyer won't allow you to use your credit card to pay legal fees. Friends and family members can pay your attorney's fees on their own credit cards, though, since the court won't erase that debt in your bankruptcy case. Learn more about how bankruptcy lawyers get paid.

Talk to a Bankruptcy Attorney First

Because bankruptcy is a qualification process that's more often complicated than not, your safest move is to talk to a bankruptcy attorney before you file, not after. Most people benefit from retaining a bankruptcy lawyer, since it's usually well worth the cost. You'll likely discharge far more in bills than you'll pay in attorney's fees, and many lawyers offer a free initial consultation.

In the meantime, here are more easy-to-understand articles:

• Running Up Credit Card Debt Before Bankruptcy: Is It Fraud?
• Can You Keep a Credit Card After Chapter 7 Bankruptcy?
• How Much Debt Do I Need to File for Bankruptcy?
• Questions to Expect at the 341 Meeting in Your Bankruptcy Case