Using Credit Cards Before Filing Bankruptcy May Be Treated as Fraud

If you are thinkingFraud-2 about filing for bankruptcy, then you should stop using your available credit cards.  Certain purchases and cash advances taken right before filing can be treated as fraudulent, and ruled non-dischargeable if a creditor files an objection.

As a general rule, if you purchase a total of $650.00 in luxury goods (i.e. non-essential purchases related to living expenses) within 90 days of filing bankruptcy, or $925.00 in cash advances within 70 days, then there is the possibility that your purchases will be treated as fraud.

It should be noted that a creditor can file an objection to discharge of a debt for different reasons.  It does not happen often, but if it does they will be required to prove in court that you acted with the intent to defraud them.  This can be difficult to prove because it puts the burden of proof on the creditor.  However, if a debtor makes any of the purchases or cash advances listed above, then the debtor will be assumed to have acted fraudulently, and the debtor will have the burden to prove it was not fraud.  This can be difficult to prove, as well.

Bottom line: just stop using credit cards or taking cash advances prior to filing bankruptcy, and you can avoid the entire issue.

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