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If You’re Considering Bankruptcy, Be Careful with Credit Cards

Paying for juice by credit card reader

When you’re struggling to cope with overwhelming debt, there’s often a temptation to play credit card roulette. You might take out a cash advance on one credit card to pay down the balance on a higher interest card. You might take out a new card with a balance transfer incentive and load it up with debt you can’t repay. You might even take out cash advances for your living expenses. Unfortunately, this kind of activity can give the appearance of intent to defraud the credit card company, especially when it occurs in the run-up to your bankruptcy filing.

If you are considering bankruptcy, stop using your credit cards. The law presumes intent to defraud on certain transactions up to 90 days before a bankruptcy filing. The burden is on you to prove you did not intend to defraud the credit card company. To do that, you must prove you did not intend to declare bankruptcy at the time of the transaction. Perhaps you can present evidence that it was reasonable for you to expect your finances to turn around. For example, you might have been given strong assurances you would be hired for a certain job that never materialized. But proving you weren’t contemplating bankruptcy when you filed within three months of running up your credit card balance is not going to be easy.

If your transactions are the least bit suspicious, the credit card company can file a nondischargeability complaint. That means the company is challenging your right to have the debt discharged. If the bankruptcy court agrees with the credit card company  — that you made purchases or took out cash advances intending to discharge those debts in bankruptcy — the court can declare your credit card balance ineligible for discharge. You will still have to pay that debt after you go through bankruptcy.

If you do file bankruptcy, you want to get every advantage of the law. That’s why it’s so important to consult an experienced bankruptcy attorney, one who can evaluate your specific circumstances and recommend the most effective course of action.

If you’re considering personal bankruptcy, uninformed mistakes can cost you. Call Miller Law Group, P.C. today at 434-218-3987 or contact us online to make an appointment for a FREE consultation.