Can You Still Use Your Credit Card If You Are Going to Declare Bankruptcy?

A person can still use his credit card before filing for bankruptcy, but he cannot use a credit card without the intent to repay it. Use of a credit card before filing for bankruptcy may put a debtor in a situation in which the credit card debt cannot be discharged. This can occur if the debt was obtained by fraud, which occurs if the credit card application was fraudulent or if debts were incurred without the intent to repay.

Bankruptcy Discharge

During a bankruptcy case most credit card debts will be discharged, which means they do not have to be repaid.

Challenges by Credit Card Companies

Credit card companies can challenge discharge of debts they believe were fraudulently incurred through what is sometimes termed a nondischargeability action. This most commonly occurs because the debtor allegedly incurred debt without the intent to repay.

Warning Signs that a Debtor is Incurring Debts Without Intent to Repay

Some actions that could be perceived as indicating fraud include incurring debts without a source of income, a pattern of increasing borrowing right before filing for bankruptcy, and opening new credit cards before filing for bankruptcy.

Considerations

Credit card companies can challenge the discharge of debts in both Chapter 13 and Chapter 7 bankruptcy cases.

Credit Card Cancellation

If you maintain a zero balance, there is a chance a company may allow you to keep your credit card after filing for bankruptcy.

References

• Moran Law: Evaluating Credit Card Discharge Issues
• Bankruptcy and Credit Cards: Don't Charge Up Before Filing
• Bankruptcy Action: Bankruptcy Information, FAQ's, Chapter 7 & 13 Information