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Can I keep using my credit card if I plan to file bankruptcy?

On Behalf of | Jun 18, 2018 | Chapter 7 Bankruptcy |

You’ve been struggling to pay your bills for a while now, and recently you decided to file Chapter 7 bankruptcy in Ohio. Even though you are making plans, life goes on, and you still have things you need. Your unsecured debts will be discharged in the bankruptcy. Does that mean it’s OK to charge your credit card to the limit?

It depends. According to Bloomberg, a creditor could dispute your inclusion of the charges in the bankruptcy and sue you for payment if it suspects that you made the purchases knowing you would never pay for them.

The Bankruptcy Code does state that purchases you make with a credit card in the 90 days before you file could be disputed. However, if you are buying goods or services that you or your family needs, the court may determine that the purchases are justified, and the debt can be included.

On the other hand, if your purchases qualify as luxury goods, and they cost more than the current limit, the creditor may win the lawsuit, and you would have to pay that debt, even though your others are discharged. The court may also rule in the creditor’s favor if you obtain a cash advance over the limit.

Like so many things in the legal system, intentions matter. If you made your purchases before you decided to file bankruptcy, the court may believe that you meant to pay the debt rather than simply charging the card up because you knew you would not have to pay.

Judges take lawsuits such as these on a case-by-case basis, so this general information should not be interpreted as legal advice.


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