There is never a perfect time to file a bankruptcy case. When people come to talk to me about a filing for Chapter 7 or Chapter 13 at my Asheville, North Carolina bankruptcy law office, we almost always talk about their budget and how they are paying their bills right now.
Ideally, clients should wait to file a bankruptcy case until their credit cards have not been used for several months. But that does not always work, and our challenge is to find a real life solution for people in serious trouble. Here’s what the law says:
Section 523 of the Bankruptcy Code describes circumstances where credit card debt will not be discharged. Section 523(a)(2)(c) makes non-dischargeable consumer debt totaling more than $500 for luxury goods and services owed to any one creditor that are incurred within 90 days of filing, or cash advances totaling $750 or more owed to any one creditor made within 70 days of filing. Section 523(a)(2) makes non-dischargeable debt owed to a creditor that was incurred by false pretenses or by fraud.
The bottom line is that you may never use a credit card fraudulently. More practically, a presumption of abuse arises if you have charged more than $500 on ANY ONE CARD (over $500 spread out over several cards may not trigger an objection by a creditor) within 90 days of a filing. If you have spent over $500 within 90 days on a credit card for non-luxury items (food, utilities, etc.), we have an argument that can rebut a presumption of abuse which would probably lead to a discharge of those debts in addition to your other debts.
Your situation is different than what your friends and neighbors have told you about bankruptcy. Scheduling a free consultation is easy, and taking the time to become informed may be the best 30 minutes you ever spent. Contact me if you are wondering about your relief options.
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