Think Before You Charge: Credit Cards And Non-Dischargeable Debt

Running up your credit cards prior to filing bankruptcy in Michigan ( in anticipation of filing ) may be considered fraud and cause your debt to be non-dischargeable.

Buying luxury items such as a new flat screen, jewelry or even an Ipad can be presumed to be fraudulent and therefore nondischargeable: if: (a) a consumer incurs a debt to any single creditor totaling $500 for luxury goods or services incurred within 90 days before the filing; and, (b) cash advances on credit card obtained within 70 days before the filing are also presumed to be nondischargeable.

Check with your attorney concerning large amounts of credit card debt incurred for “luxury goods” right before your bankruptcy.

The banks themselves may also file for “Adversary proceedings in bankruptcy court” to contest the dischargeability of these debts. Therefore, you may end up being liable on these fraudulent debts despite the bankruptcy filing; and, worse, may also result in having your bankruptcy case dismissed.

The bottom line – as tempting as it may be to max out your credit cards before you file- DON’T

If you have questions concerning bankruptcy contact David Lutz at (248) 624-5500


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Filed under Bankruptcy/Debt, David Lutz

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