If we file bankruptcy 90+ days after incurring $4000 of credit card debt over a 4-week period, is that debt non-dischargeable?

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If we file bankruptcy 90+ days after incurring $4000 of credit card debt over a 4-week period, is that debt non-dischargeable?

After not using our credit cards for several months in the hopes of not making our debt problem worse, we are suddenly charging almost all of our purchases on them because we got threatened with foreclosure and decided to direct all income towards catching up with house payments. Assuming we keep the per-card total to below $500 ($400 on each of 10 cards) and don’t buy luxury goods and wait at least 90 days before filing for Chapter 7, is the trustee or the court likely to look upon the sudden spate and aggregate amount of charging (about $4000 spread out over 10 cards) as fraudulent or as non-dischargeable?

Asked on August 4, 2012 under Bankruptcy Law, Texas

Answers:

Terence Fenelon / Law Offices of Terence Fenelon

Answered 9 years ago | Contributor

Very good question.  Initially, I wouldn't worry about the trustee.  They will not bother with a "load-up" as you described.  Your problem may the individual creditors.  They can file an objection to discharge if the debt was incurred within 90 days of the filing.  Did you make any payments after the withdrawels?  if so, it show that you had the intent to repay.  If not, things get stivkier.

The liklihood of a creditor filing anadversary case for $400.00 is minimal.  Therier costs are likely to be higher.  I wouldn't lose much sleep.  Each creditor would have to file their individual cases to recoup the aggregate sum.  again, not likely.  The court will not get invloved unless they are requested by a creditor via an adversary.  again, not likely.

Goodluck


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