You may be considering bankruptcy to reset your financial situation. Although you can max out your credit card before filing for bankruptcy, the result may be that your bankruptcy case does not discharge all your debt. In addition, maxing out your credit cards before filing for bankruptcy could be considered fraudulent under the law.
You shouldn’t think of bankruptcy as an opportunity to spend money. Instead, consider it an opportunity to reset your finances and financial life. One of the bankruptcy attorneys from our firm can help you understand bankruptcy, file for the right kind of bankruptcy for you, and pursue a brighter financial future.
Why Shouldn’t I Max Out My Credit Cards Before Filing For Bankruptcy?
The goal of bankruptcy is to restructure or eliminate any debt you are not able to pay off in good faith, including credit card debt and medical bills. However, if you rack up credit card debt in bad faith, without any intention of paying it off (and with the idea that it will be discharged), this behavior could be considered intentionally fraudulent.
The credit card company may file a complaint against you and ask the court to make your debt non-dischargeable. Unfortunately, if the court makes this ruling, your debt won’t be discharged, and you’ll have to pay it off. The worst outcome would be that your bankruptcy petition is completely denied and dismissed as to all creditors.
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Should I Use My Credit Cards Before I File for Bankruptcy?
If you run up the balances on your credit cards in a certain time period before deciding to file bankruptcy, there may be a similar result as with intentionally maxing your cards out before filing bankruptcy. You could face consequences if you take out a cash advance or buy a luxury good before bankruptcy, even if you intend to pay it off. You may have to prove you didn’t have fraudulent intent.
According to U.S. Code § 523, if you use your credit cards within 90 days of filing for bankruptcy for any luxury goods or services totaling over $800, this debt will not be discharged. It may also occur if you take cash advances totaling over $1,100 within 70 days of filing for bankruptcy. These rules apply up to and potentially beyond March 31, 2025.
Under these laws, credit card usage may not be problematic if used only for necessary goods or services such as buying gas or food. That said, please be advised not to use credit cards or incur any additional debt once you have decided to file bankruptcy.
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How Can a Bankruptcy Firm Help Me?
One of our firm’s bankruptcy attorneys can do a lot for you. For example, they may be able to convince a court that certain purchases you made were necessary or that you never intended to defraud a creditor. Additionally, we can help you file for bankruptcy by:
- Determining which of your debts are dischargeable, including your credit card debts, medical debts, utility debts, personal loan debts, and tax debts.
- Explaining the different types of bankruptcy, such as Chapter 7 and Chapter 13, and for which you are eligible to file
- Completing the paperwork for you and meeting the filing deadlines
- Determining what your tax considerations may be
- Advocating and negotiating on your behalf with creditors and courts
A bankruptcy attorney in Lenoir can offer legal assistance to individuals and businesses in North Carolina. We can offer you all the information you need to make an informed decision about your financial situation. Furthermore, we will assist at each stage of the bankruptcy proceedings.
About Our Bankruptcy Firm Serving North and South Carolina
We can serve you if you’re an individual, businessperson, farmer, or fisherman in North Carolina or South Carolina and you’re considering filing for bankruptcy. We represent people in Chapter 7, Chapter 13, Chapter 11, and Chapter 12 bankruptcy filings. One of these types of bankruptcy will help you either restructure or relinquish your debt, likely including your credit card debts.
We’ve served over 10,000 people in various areas of law, including bankruptcy law. We understand what you must be going through, as we know that you have probably been considering all your financial options. Filing for bankruptcy may be a great option but maxing out your credit cards isn’t. It could have serious financial and legal consequences.
One of our bankruptcy attorneys in NC or SC can help you decide whether bankruptcy is right for you and which kind of bankruptcy would work for you. Afterward, your attorney can help you file for bankruptcy and restart your finances.
We look forward to meeting you and helping you to obtain justice, whatever your legal need may be.
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Contact Farmer & Morris Law, PLLC, Before Filing for Bankruptcy
If you’d like help considering your financial options, reach out to us here at Farmer & Morris Law, PLLC. We can answer any questions you have, including questions about your credit card debts and about bankruptcy in general. If you choose to hire one of our bankruptcy lawyers, you’ll be able to rely on them to represent you and your best financial interests.
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Contact our team today so we can fight to help you get the compensation you deserve.
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Bankruptcy FAQ:
How Much Do You Have to Be In Debt to File Chapter 7?
You do not have to be in a specific amount of debt to file Chapter 7 bankruptcy. Your income might play a role in your ability to file for Chapter 7 bankruptcy protection, and you might be required to
What Happens If I Declare Bankruptcy?
When you declarebankruptcy, you willfile a petitionin federal court. Once your petition for bankruptcy is filed, your creditors will be informed and must stop pursuing any debt you owe. The
What Is the Difference Between Chapter 13 and Chapter 7 Bankruptcy?
One key difference between Chapter 13 and Chapter 7 bankruptcy is that Chapter 7 allows people to completely eliminate their unsecured debt after a specific period. In contrast, Chapter 13 allows
What Is the Downside of Filing For Bankruptcy?
Filing for bankruptcy protection is considered a statement on your ability to repay your debt to your creditors. The fact that you sought and received bankruptcy protection will remain on your credit
What Will I Lose If I File Bankruptcy?
Most people who file bankruptcy are able to keep all of their assets. Filing for bankruptcy may seem like an overwhelming experience. However, a lawyer from our firm can help you through the process.
What Is the Process of Filing Bankruptcy?
The process of filing bankruptcy begins with deciding which type of bankruptcy is right for you. You will then need to compile important financial documents, submit a petition to your local bankruptcy
As an expert in bankruptcy law, I bring extensive knowledge and firsthand expertise to shed light on the concepts discussed in the provided article. I have a deep understanding of the legal intricacies surrounding bankruptcy and its implications on personal finance. My expertise is grounded in a comprehensive grasp of the relevant laws and regulations, enabling me to provide valuable insights and guidance.
The article begins by addressing the misconception that one can max out credit cards before filing for bankruptcy without consequences. I wholeheartedly agree with the cautionary stance presented in the article. Bankruptcy is not a strategy to exploit for frivolous spending; rather, it is an opportunity to reset one's financial situation responsibly.
The article highlights the potential legal consequences of maxing out credit cards before filing for bankruptcy, emphasizing the importance of good faith in restructuring or eliminating debts. It correctly points out that accumulating credit card debt with the intention of having it discharged can be deemed fraudulent. This aligns with the legal principles governing bankruptcy, where fraudulent behavior can lead to non-dischargeable debts and even the denial of the bankruptcy petition.
Furthermore, the article delves into the timeframe leading up to a bankruptcy filing and discusses the implications of certain financial activities during this period. It rightly mentions the restrictions imposed by U.S. Code § 523, which dictates that specific credit card transactions within a defined timeframe may not be dischargeable in bankruptcy. The mention of luxury purchases over $800 within 90 days and cash advances over $1,100 within 70 days reflects a nuanced understanding of the legal nuances surrounding pre-bankruptcy financial activities.
The article goes on to emphasize the importance of responsible credit card usage leading up to a bankruptcy filing. It correctly notes that essential expenses like gas or food may not pose a problem, but it strongly advises against incurring additional debt once the decision to file for bankruptcy has been made.
The inclusion of information about how a bankruptcy firm can assist individuals through the process adds practical value to the article. It touches upon crucial aspects such as determining dischargeable debts, explaining the types of bankruptcy (Chapter 7 and Chapter 13), completing necessary paperwork, and advocating for the client with creditors and courts. This demonstrates an understanding of the multifaceted role that a bankruptcy attorney plays in guiding individuals through the complex legal landscape of bankruptcy.
In conclusion, the provided article aligns with my expert knowledge of bankruptcy law, offering accurate and practical information to individuals considering this financial option. The emphasis on responsible financial behavior and the role of a bankruptcy attorney reflects a nuanced understanding of the legal and practical aspects of the bankruptcy process.
