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.
In This Article
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.
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
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.
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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.
Contact Farmer & Morris Law, PLLC today for a free initial consultation and case review.