If you are among the millions of Americans struggling with debt that seems
bankruptcy may be the best option for finding relief and a fresh financial head start.
If you are considering bankruptcy, you should now that there are certain
things you might want to avoid prior to filing under any Chapter of the
bankruptcy code. This is especially true when certain action, such as
using credit cards, may actually negate your eligibility for filing, or
even subject you to criminal consequences.
For many people struggling with debt, using a credit card has been a means
to get by. Unfortunately, incurring charges can only cause the cycle of
debt to continue. At Allmand Law Firm, PLLC, we have worked with numerous
men, women, families, and businesses throughout the Dallas – Fort
Worth area when they were dealing with tough times. We know the struggles
our clients face, and we know that credit cards can be the lifeline they
rely on when times get increasingly tough.
While using a credit card to pay down debts and obligations may not always
have negative consequences, you must consider how it is being used and
why you should try to limit or avoid using one altogether.
- Your transactions will be reviewed – When you file bankruptcy, a court appointed trustee will review
your financial records, including recent transactions to any credit cards
your own. These reviews will pay close attention to how much debt was
incurred, as well as what types of items were purchased or where payments went.
- Fraud allegations – The primary reason why it is best to avoid racking up credit card
debt prior to bankruptcy is that it may be viewed as fraud. Trustees who
review financial statements are on the lookout for signs of credit card
transactions, such as excessive charges, luxury goods and services, and
more, which signify a person ran up their bills with no intention to repay
them, either because they knew they would soon be filing for bankruptcy,
or because they lacked the financial resources to make good on the debt.
Fraud allegations can create a host of problems, including the possibility
of federal charges for bankruptcy fraud and potential prison sentences.
- Federal laws – Federal laws have guidelines for dealing with excessive and fraudulent
credit card use prior to a bankruptcy filing. This includes running up
more than $675 in charges for luxury goods or services within 3 months
of filing. Cash advances over $950 within 70 days prior to filing will
also be considered fraud
- Bankruptcy eligibility – If a bankruptcy trustee suspects fraudulent credit card use, or
even creditors for that matter, it can affect your ability to file bankruptcy.
In many cases, allegations of fraud will result in a bankruptcy filing
being thrown out. It will be up to you to prove that charges did not amount
to fraud, and that can be a difficult task worth avoiding.
- No discharge – In some cases, creditors may wish to petition the court to prevent
a discharge on unsecured credit card debt if they object to recent transactions.
This may be the case if spending increases in the months prior to filing.
Because there are many negative consequences associated with credit card
use prior to filing, the safest bet is to avoid using them. Our Dallas
bankruptcy lawyers know that this can make difficult times even more stressful,
which is why we encourage anyone in this situation to seek immediate help
from our legal team. You may have options available, and our experienced
attorneys can help you explore them when you speak personally with a member
of our team. Request a FREE financial empowerment session today.