We’re in precarious economic times, and now the holidays are approaching. If you are planning on filing for bankruptcy due to a mountain of unpaid bills, it could be tempting to run up the credit cards for one final holiday spree.
That would be a very bad idea. In fact, it could cause your debt discharge to be denied. Learn more about the circumstances surrounding consumer bankruptcy.
Creditors can file adversary proceedings
One of the problems with running up credit cards and lines of credit prior to filing for bankruptcy is that your creditors can allege fraud. Actions that might trigger fraud allegations include:
- Failure to disclose assets
- Hidden the value of assets
- Abuse of the bankruptcy courts
Creditors may object to a portion of your debt discharge and allow other debts to go unchallenged. It all depends on the circumstances of your individual case.
Can you still use your credit cards at all?
In general, you should cease using your credit cards as soon as you begin to contemplate filing for bankruptcy. However, if you are using your credit cards to pay for your everyday living expenses, such as rent, food and utilities, it will be much harder for creditors to exclude debts from the court’s discharge. Make sure that you pay for these items directly with your credit card instead of getting cash advances, which can also be challenged.
Still have questions?
If your debts are mounting and you can’t afford to pay them, creditors’ calls can become overwhelming. But there’s a better way. Filing for consumer bankruptcy can be a way out of the tangle of debts you have incurred.