Before the passage of the Credit Card Accountability Act of 2009, borrowers could make up an income because credit card companies rarely went through the trouble to check W-2 forms and pay stubs. In any situation, lying on a credit card application is a dangerous move, because you might need to declare bankruptcy down the road. The credit card company could prove fraud and force you to repay every penny.
You can file bankruptcy if you lied on your credit card application, but this is a risky move, especially if this is the largest account you want to discharge. The creditor could object to the motion to discharge the credit card debt with an adversary proceeding based on credit card fraud. The judge might even use the existence of fraud to dismiss the entire bankruptcy proceeding.
Lying on a credit card application is probably not enough to prove fraud, according to Moran Law Office. The creditor would need to prove fraudulent use of the line of credit and an intent not to repay. Some common indicators of fraud used by bankruptcy courts are use of the cards within 90 days of filing bankruptcy, the financial condition of the debtor, such as whether he had a job, and the type of purchases made. Luxury purchases before bankruptcy are a huge warning sign of fraud.
Should the bankruptcy court dismiss your bankruptcy case, you will have to wait 180 days to file again. In this time, you lose the automatic stay protection, which stops creditors from going after your assets. Thus you could end up losing out on discharging your other debts due to fraud on one account and the cost of filing bankruptcy as well as any attorney fees.
You should consult a licensed attorney about any bankruptcy case. The attorney will look at the circumstances surrounding your credit card debt and advise you on whether to include the case in bankruptcy. If the credit card debt is not discharge-able through bankruptcy, you could try a debt settlement. Credit card companies often settle debts for far less than the original balance due to the threat of a bankruptcy discharge.