Credit Card Use Before Bankruptcy

People considering bankruptcy in Kansas City often ask if they can use their credit cards immediately before filing bankruptcy.  Generally there should not be any problem with using your credit card to pay necessities such as food, clothing and shelter shortly before filing bankruptcy. 

Section 523 of the Bankruptcy Code specifies certain situations in which credit card debt will not be discharged in bankruptcy.  Section 523(a)(2)(c) states that consumer debt totaling over $500 for luxury goods and services owed to any one creditor incurred within 90 days of filing and cash advances totaling $750 or more owed to any one creditor within 70 days of filing are non-dischargeable.  Section 523(a)(2) also states that debt owed to a creditor incurred by false pretenses or fraud is not dischargeable.  http://www.law.cornell.edu/uscode/text/11/523

Essentially Section 523 allows credit card lenders to challenge the discharge of debts in bankruptcy incurred within three months of filing for bankruptcy for anything other than necessities such as food, clothing and shelter and any credit card use within the past year if a debtor makes charges where there is no reasonable expectation of repayment, such as for goods deemed to be luxuries.  For more information please contact me, a Kansas City bankruptcy attorney, at (913) 601-3549 or visit my website at http://www.thesmalleylawfirm.com