If you are thinking about filing for Chapter 7 bankruptcy and have some credit cards that are not maxed out, you might be wondering if you could use them before you file to buy some things that you really need. While you can continue using your credit cards, there are risks to making too many purchases on them or purchasing the wrong things. Here are several things you should understand about credit card use before filing for bankruptcy.
The previous 90 days is the most important
After filing for bankruptcy, the court will appoint a trustee to review and handle your case. The trustee will look at a lot of different factors about your situation, including any charges you made on your credit cards within the last 90 days. During this time, you should avoid buying any items that the trustee would consider "luxury" items. You could, however, buy things that are not considered luxury items. Things not considered luxury items might include gas and groceries. Luxury items might include clothing or anything that you really do not need.
Risks of making luxury purchases before filing for bankruptcy
If you make purchases that the trustee considers luxury purchases within the last 90 days, there are several risks you will encounter. First of all, the trustee could dismiss your case. The basis of this would be fraud. People who know they will be filing bankruptcy cannot simply go out and max out their credit cards with the intent to have the charges discharged. This is fraud, and you take the risk of not only getting your case dismissed, but you might also end up with criminal charges against you.
The other risk you have is that your creditors could fight these charges, if they believe you made them with the intent to have them discharged through your bankruptcy case.
The best option is to stop using credit once you decide to file
The best thing you can do if you decide to file for bankruptcy is to stop using your credit cards. By not using them, you can show that you have are not trying to be deceptive in any way but are simply trying to get a fresh start with your finances.
Using your credit cards before filing for bankruptcy can create some problems for you in your case. If you would like to learn more about this, talk to a bankruptcy lawyer like Robert Bruce Jones Attorney today.