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Can I Run Up My Credit Card Balances Before I File Bankruptcy?

It may come as a surprise to some, that many people considering bankruptcy wonder if they can run up their credit cards before filing bankruptcy. Bankruptcy discharges credit card debt. Whether the credit card is $1 or $100,000, a bankruptcy discharge will typically result in a successful wiping out of the liability of that debt. However, there are caveats.


One of the caveats is that if a person racks up credit card debt with an intent to commit fraud, there is a high likelihood that that debt will not be discharged in the bankruptcy. If a person charges that credit card knowing full well that they intend to file for bankruptcy, it is almost always considered to be fraudulent by the bankruptcy court.

Running up charges

Credit card companies have the opportunity to file a non-dischargeable complaint in a bankruptcy case if they think that the person filing bankruptcy is intending to defraud them. As a bankruptcy lawyer, we highly recommend avoiding running up high credit card balances, once aware that a bankruptcy is imminent. The credit card companies can show through statements whether the person ran up a great deal of credit card charges within a short period before the bankruptcy filing.

In this case,  they may be able to persuade the court that fraud is at play here and the courts will more than likely not discharge this particular debt in the bankruptcy. This is a separate proceeding, but if the credit card company is successful, the debt will not be discharged.

Cash Advances

When considering bankruptcy, a person should greatly restrict any cash advances on a credit card. Regardless of whether or not they intend to return the money, repaid with interest, or have no idea that they are going to be filing bankruptcy at the time of withdrawing the cash, the courts have a very stringent standard that if a person withdraws more than $950 within 70 days before filing bankruptcy, fraud is to be presumed.

Once fraud has been put on the table, with regard to a bankruptcy filing, it becomes vital for the filer to be able to show the court that they intended to repay the debt or that they did not intend to file bankruptcy. Typically, a bankruptcy attorney will encourage their clients to show both.

The credit card company must file a challenge

It is never advisable to run up high amounts on a credit card before filing for a bankruptcy because it is highly likely that the credit card company is going to file a challenge. However, the credit card debt will be discharged unless the credit card company files a non-dischargeable complaint. If the credit card company fails to notice the credit card activity or does nothing, then the debt will be discharged like normal.

However, it is important to know that most credit card companies will be very careful and diligent about reviewing all of your purchases and other activity that occurred immediately before the bankruptcy filing. Learn more about the process by calling our office and making an appointment.

Note: This is for information purposes only and does not constitute legal advice.