Are you thinking about taking a cash advance right before filing bankruptcy? Yeah, go right ahead. (psst., and make sure you don’t tell your bankruptcy attorney about it). You can almost guarantee that you will get sued by your friendly credit card company.
Buying colored contacts, taking a last minute trip to the coast or Vegas? If you charge it up – Visa, Master Card, AMEX, doesn’t matter, if the credit card company thinks it’s a “luxury good” you’ll also can get sued during your bankruptcy.
What? I thought credit card debt was dischargeable in bankruptcy. Yes it still is, BUT. Just like life, bankruptcy, is full of exceptions.
Credit card companies can get very aggressive about these types of charges (cash advances) and (luxury goods) and if you make one immediately before filing bankruptcy the credit card companies have a blunt instrument called an “Adversarial Proceeding” – it’s a lawsuit that they can file to have the bankruptcy court deem that charge “non-dischargeable.”
In other words, your weekend at Disneyland (all the charges associated with the trip –gas, food, hotel and amusement park entrance fees) will be scrutinized under the “luxury goods” rule.
Same goes for cash advances.
If the court determines the charges to be abusive than that part of your credit card bill will not be discharged – it will remain a debt you have to pay or be obligated to pay after your bankruptcy.
So, if any of your credit card charges fall into one of the exceptions for “presumptive credit card abuse” – 90 days (luxury goods) or 70 days (cash advances) before filing bankruptcy it could trigger these lawsuits.
Believe me, credit card companies are getting hammered right now and they are looking for easy targets – and that can be you if you make a dumb mistake by not knowing these rules.
So, two pieces of advice: (1) once you’ve decided to file bankruptcy, or more importantly, once you realize you can’t continue to pay your credit card bills, stop using them. Period. No more discussion. It’s the right thing to do; (2) tell your bankruptcy attorney about your recent credit card charges and let him or her evaluate your situation and advise you accordingly. They may or may not be a problem, and if there is a problem there may be a workable solution to lessening the likelihood lawsuits. Call me today to discuss confidentially your situation.
Disclaimer
Fresno-Bankruptcy-Lawfirm.com is owned by the Law Offices of Jeffery D. Rowe. We are a debt relief agency. We help people file for bankruptcy relief under the Federal Bankruptcy Code (Title 11 of the United States Code). If you would like to discuss your situation in further detail, please call our offices at: (559) 228-1500 to schedule a consultation.
Tags: abuse, cash advances, credit card, discharged, lawsuit, visa