It’s A Bad Idea To Run Up Your Credit Cards Before A Bankruptcy


Hey, you’re going to declare personal bankruptcy anyway, and you still have several thousand dollars left on your credit card line. Why not use that “found money” to keep the lights on, get cash and maybe even make a few fun purchases you’ve been putting off. It’s not like you’re ever going to have to pay that money back.

Here are several reasons it’s a bad idea, courtesy of bankruptcy Las Vegas law firm, Vohwinkel & Associates.

It’s Illegal. All you need, on top of your current financial challenge, is to have to hire a pricey criminal defense attorney. But that’s exactly what could happen if one or more of your creditors make a discharge challenge and accuse you of having committed fraud (scary word).

It Could Get Costly. In addition to what you might have to spend on legal costs, you could end up having to pay back all of those last-minute expenditures and cash advances—and at typically sky-high credit card interest rates.

It Will Definitely Cost You Time. You want your Chapter 7 or Chapter 13 personal bankruptcy to be discharged as soon as possible. You need to get on with your life. But a discharge challenge from a credit card company will only slow things down—even if you eventually win. The bankruptcy court will get even more involved and it will probably mean more phone calls, emails, letters and meeting with your lawyers and the court. You don’t need that.


The good news is that it’s relatively rare that a credit card company offers a challenge. That’s at least in part because bad intentions are so hard to prove. In other words, you might have been regularly using—even overusing—your credit cards for months before your filing. After all, as your financial situation worsened, it would make sense that you might rely more and more on borrowed funds.

What the courts look for is evidence that your pattern of use changed dramatically late in the game. For instance, if you normally charged a few hundred dollars a month on your credit card before filing and then you maxed out your card over the last several weeks, including a few thousand dollars in costly cash advances—that might catch the court’s eye.

The authorities will also look at what you bought with that maxed-out card. In addition to the cash advances, if your activity suddenly gravitated toward luxury items and services, that will likely draw unwanted attention as well.


The bottom line is that you should consult with a trusted bankruptcy lawyer Las Vegas NV as soon as you even consider the possibility of declaring personal bankruptcy. Call Vohwinkel & Associates today. We look forward to helping you relieve your financial pressures the right way.

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