When it comes to using credit cards before filing for bankruptcy, there are some important considerations:
Intent Matters: If you’ve decided to file for bankruptcy, it’s crucial to avoid incurring new debt with the intention of eliminating it through bankruptcy. Debts incurred with the explicit purpose of being discharged in bankruptcy cannot be eliminated. The bankruptcy process is designed to provide relief for honest but unfortunate debtors, not to allow individuals to max out credit cards intentionally.
Essential Expenses: While you should generally avoid using credit cards once you’ve decided to file for bankruptcy, there’s an exception for essential expenses. You can use credit cards for necessities like food, utilities, and rent if you can’t afford them otherwise. However, be cautious and use credit cards only for essential items.
Stop Making Payments: If you’re caught in a cycle of making minimum payments on your credit cards while using them for necessities, consider stopping credit card payments. This will free up money to pay for necessities directly (e.g., with cash or a debit card).
Recent Charges: If you’ve recently charged expenses on your credit card (within the last 90 days before filing), it’s essential to handle them carefully. Ideally, pay at least the amount charged before filing your bankruptcy case. This demonstrates good faith and shows that you tried to do the right thing.
Creditor Objections: Keep in mind that if you charged significant amounts on your credit card in the three months before filing, the credit card company may object to discharging that debt. You’ll have an opportunity to explain your actions to the court, and the creditor has a specific timeframe to raise objections.
Remember, bankruptcy is a legal process, and it’s essential to follow the rules and act in good faith. If you have specific concerns, consult with a bankruptcy attorney to navigate the process effectively1
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