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Can you use your credit card right before bankruptcy?

Credit card debt is one of the biggest reasons why people have to file for bankruptcy. According to a recent report, the total amount of credit card debt in the United States increased by $36 billion in the last year. 

Most of the time, you can discharge most or all credit card debt in a bankruptcy. However, there are extenuating factors that could affect this. One of them depends on how much you spent on your credit card in the months leading up to the bankruptcy. It is for this reason you should avoid making unnecessary purchases on your card if you suspect you will need to file for bankruptcy soon. 

Intent to defraud creditors

Many people fall into credit card debt through no fault of their own. Sometimes, it is necessary to place large expenses on a credit card. Failing to pay the amount in full every month can cause you to accumulate interest, and soon you are tens of thousands of dollars in debt. However, if you purchase luxury items on your credit card before filing, such as jewelry, clothing or cash advances, then the judge will take note. This shows you intended to defraud your creditors by buying as much as you could before discharging the debt. It is apparent when this occurs, so do not attempt it. 

The credit card company can challenge the filing

When you file for bankruptcy based on credit card debt, the credit card company has a chance to file a nondischargeability complaint. In the event the credit card company does nothing, then the bankruptcy proceedings will continue with most or all the debt going away at the end of the bankruptcy. However, these companies often review all your purchases carefully. They often fight the charges if you racked up more debt unnecessarily within the last few months. You may need to pay off that debt after the bankruptcy. 

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