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What Not To Do: Run Up Your Credit Card Debt Ahead of a Bankruptcy

Adam Mack, J.D.

Hillary Stirling, research assistant


A person plans on filing bankruptcy so he or she figures that, since it’s all going to be discharged anyway, they may as well use their credit cards to buy a few longed-for items for themselves first.


The problem with this approach is that the trustee will request your credit card statements and will review them.  If you use your credit cards more frequently or for higher-ticket items in the 90 days leading up to a bankruptcy, the trustee will likely catch that.  Far worse, however, is if the credit card company reviews your statement (which they usually do) and finds that you purchased luxury or high-ticket items.  If they did, they would likely then file a motion with the court requesting the judge to enter a judgment stating that your debt to them is nondischargeable on grounds of fraud.  If the judge grants that motion, you would still be on the hook for all of the credit card debt you owe to that specific company.

It’s easier for the credit card company to prove fraud than you might think.  That’s because the credit card company doesn’t have to prove actual fraud (in which you went into a store and purchased items with the specific intent to never pay it off). Actual fraud is difficult to prove; credit card companies only have to prove constructive fraud.  Constructive fraud takes the “actions speak louder than words” approach in which your actions imply intent. So let’s say that someone used a credit card to buy a $2000 TV less than a week before filing bankruptcy. If the credit card company files the motion, the court would be within its rights to construe the act of purchasing the TV and then filing bankruptcy as a fraudulent one intended to rip off the credit card company.  The best course of action is to stop using your credit cards as soon as you start considering bankruptcy.


By granting a discharge, you will be greatly benefiting at the expense of your creditors.  That’s part of why the judicial system demands such high standards of behavior on the part of the person filing bankruptcy.  You don’t want to even look like you might be doing something dishonest in regards to your creditors.  This is yet another way in which bankruptcy is far more complex than it might first appear.  Having a qualified Kansas bankruptcy attorney at your side throughout the bankruptcy process is invaluable to help you avoid pitfalls like this one.  Please call us today to learn more!


These articles are for general informational use and do not constitute legal advice. Since laws change over time, it’s possible some articles are out of date and for that reason, we make no representation that the articles are fully accurate. For actual, up-to-date legal advice (including a free consultation), please contact us!