Credit card debt is one of the biggest reasons that push people into filing for bankruptcy. A general rule in bankruptcy is that all unsecured debt can be discharged in bankruptcy with a few exceptions. Credit card debt is unsecured debt, so it too is dischargeable in bankruptcy but it too has limitations on dischargeability of the credit card debt.
Credit Card companies can sue you after you file for bankruptcy:
Most people think that once their bankruptcy is filed, there is nothing that a credit card company can do to them because all their debts were included in the bankruptcy filing, this is far from the truth. Upon the filing of your bankruptcy case a credit card company computer will likely generate a report on the money that you spent on the credit card in the months prior to your bankruptcy filing.
Factors that a credit card company looks at to determine debtor fraud:
- The time passed between the credit card use and the bankruptcy filing
- The number and amount of charges you made
- Credit Card companies can look back up to one year before filing
- Your financial and employment status when you filed for bankruptcy
- Increase of credit card usage in the months before filing
- Large cash advances prior to filing for bankruptcy
- Cash advances over $875 taken within 70 days of filing for bankruptcy aren’t dischargeable.
- Charges a debtor incurred after consulting/retaining a bankruptcy attorney
- The purchase of luxury goods in the months before filing for bankruptcy
- Luxury goods examples include electronics, jewelry, expensive clothing, sporting equipment, and furniture.
- Luxury goods totaling over $600 and purchased within 90 days of filing bankruptcy won’t be discharged
How to avoid Credit Card lawsuits before filing for bankruptcy:
In order to avoid having and credit card adversary proceeding filing against you when you filing for bankruptcy is to meet with an experienced bankruptcy attorney. When you meet with the attorney make sure to inform him of the charges you have accrued in the previous 90 days, or provide copies of the last 90 days worth of credit card statements to your attorney. You bankruptcy attorney will be able to guide you into filing a successful bankruptcy without having to deal with an adversary proceeding.
How to deal with an adversary proceeding:
If you file your bankruptcy and an adversary proceeding has been filed against you then you should immediately consult with your bankruptcy attorney. Typically defending an adversary proceeding is a separate legal fee than that of the fees to file for bankruptcy. Your attorney should be able to gauge if it is better to settle with the credit card company or worth defending the debtor in the lawsuit.
Shmucher Law, PL, a bankruptcy law firm, represents debtors, creditors, and trustees in bankruptcy matters throughout Broward and Miami-Dade counties.