Using Credit Cards Before Bankruptcy.

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Within 90 Days of Filing Bankruptcy:

Luxury items charged to credit cards that total more than $550 within the 90 days of your bankruptcy filing are presumed to be non-dischargeable. Luxury items are defined as goods or services that are not reasonably necessary for the support or maintenance of your household. What does this really mean? Credit card charges made for food, gas, or diapers are not going to be a problem; but charges for a new stereo, a new HD TV, a ski trip, or summer vacation probably will.

Even though the law says that these charges are presumed to be non-dischargeable, the creditor would still have to file papers in your bankruptcy case to ask the court to declare the debt to be non-dischargeable.

Cash Advances Made Within 70 Days Prior to Filing Bankruptcy:

Any cash advance you take on your credit card over $875 prior to filing for bankruptcy is presumed to be non-dischargeable. This includes things such as using credit card checks. While there is some wiggle room when it comes to purchasing “luxury goods,” if you take a cash advance within the 70 days prior to filing bankruptcy and the creditor objects, we will lose that battle. Again, the credit card company will still have to make an appearance in your bankruptcy and object to that specific debt being discharged.

There are basically two ways to deal with credit card issues prior to filing-

(1) don’t buy anything or take a cash advance from a credit card; and/or

(2) wait to file your bankruptcy case so that you are at least 90 days from your last credit card purchase/advance.