Talking About Bankruptcy Services

Don't Be Fraudulent: Credit Card Use Prior To Bankruptcy

31 July 2018 by Carlos Gomez

The connection between the need to declare bankruptcy and credit card use is pretty strong; those little pieces of plastic can easily wreak havoc on people's financial situations. There is another way to connect these two issues, however, and they involve the use of credit cards just before declaring bankruptcy. Read on to learn how to avoid being accused of bankruptcy fraud for credit card use.

Two forms of debt

A quick explanation about bankruptcy debt might help you to understand why it's so tempting to run up credit card debt before declaring bankruptcy. Credit cards come under the heading of unsecured debts, which means that there is no property to secure them. When you were approved for your card there was nothing like a home or a car at risk, unlike with a home or auto loan. When you declare bankruptcy, most, if not all, credit card debt simply goes away with no loss of property. With a bankruptcy filing, you will not only be losing a major debt that's been hanging over your head but will also free up some of your budget for other things since you no longer have to pay those high minimum monthly payments.

Using the card before bankruptcy

When your financial situation has deteriorated to the point that you are using your credit cards to pay for food, shelter, and other bills, then you are primed to make the big bankruptcy decision. Before you do, however, be sure that you are within the rules. Speak to your bankruptcy lawyer and get personalized advice, because failure to follow the guidelines could put your filing in jeopardy.

Why have rules?

While you may consider your credit card issuers partially to blame for your situation, you might want to consider it from their point of view. Thousands of bankruptcy filers have untold millions of debt forgiven with a chapter 7 filing, and so there are rules about the use of the cards just prior to filing. It's also important to understand how your own actions contributed to your having to file and to take responsibility so that you can make this action be worthwhile and educational. Here are the guidelines to keep in mind:

Cash advances: You cannot take more than $950.00 from any card or a combination of cards in the time period of 70 days before filing.

Credit card use: You cannot charge more than $675.00 on any card in the 90 day period prior to filing.

Exceptions: If you can show that you had little choice but to use the above methods to pay for vital expenses for you and your family, you may be allowed to exceed the amounts above.

Speak with your bankruptcy lawyer or visit sites like http://www.haven-law.com/ to learn more.

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