Medical bills and credit card debt are what primarily drive people to file a chapter 7 bankruptcy.  They need to get out from under high balances and even higher interest rates by wiping them out.  However, many people face being denied a discharge of their debt due to their actions prior to filing.  Here are three ways this could happen to you.

You Lied on Your Card Application.

Bankruptcy does not wipe out debts incurred by fraud.  If you inflated your assets or earnings, or misrepresented any other important fact on the credit card application, the card bank could object to the discharge of the entire balance of the card!

This is more likely to be important if you applied for the card recently, not only because the bank is more likely to have the original application, but also lies on the application become less relevant as time goes by if your financial situation changes to be more in line with the story you told them at the outset.

You Continued Using the Cards After Realizing You Were Broke

Under bankruptcy law, every time you use a credit card you are making a representation to the bank that you can afford to pay the bill.  Even if you have every intention of paying it “once things get better,” if you cannot afford it at the time, it’s still fraud!

Once you realize that you cannot afford the payments, or worse, once you consult with a bankruptcy attorney, stop using the cards!  You will have to stop using them once you file, so you might as well get used to it now.

You Bought Luxury Goods or Services Within 90 Days of Filing Bankruptcy

You can’t go to DisneyWorld with the whole family on your Visa card and then file bankruptcy without risking a problem.  If you purchase luxury goods or services from any one creditor worth more than $550 (an amount adjusted periodically by Congress) in those 90 days, that debt is not dischargeable!  If you take cash advances of more than $825 (also an adjustable number) within 70 days, you can also be in trouble!

So What Should You Do?

People are allowed to discharge credit card debt in bankruptcy as long as they play fair with creditors.  In my experience, objections by creditors for the three reasons set forth here are rare, but you shouldn’t risk it.

If you live in southern New Jersey and are considering filing bankruptcy, please feel free to call me at 856-432-4113 or contact me through this site for a free consultation in my Woodbury office to discuss your case.

If you are looking for more information about bankruptcy, then download my free book,Top Questions People Ask About Filing Bankruptcy in New Jersey.

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Steven J. Richardson
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Bankruptcy, Collections, Student Loan, DUI and Traffic Court attorney in Woodbury, NJ.