When Is Credit Card Debt Non-Dischargeable In A Bankruptcy?
Anyone who is filing for bankruptcy in South Florida likely wants to ensure that they have debts that will be eligible for discharge at the end of their bankruptcy case. While debtors that file for Chapter 11 and Chapter 13 bankruptcy may be more focused on the benefits of debt reorganization provided by bankruptcy and the ability to stop a foreclosure for individuals, individual debtors who file for Chapter 7 bankruptcy need to be certain that the majority of their debts will be discharged in their bankruptcy case. Otherwise, for an individual who files for Chapter 7 bankruptcy, the bankruptcy process might not make sense if debts are unlikely to be discharged. Generally speaking, most credit card debt can be discharged in a consumer bankruptcy case. However, there are exceptions, and it is critical to speak with a West Palm Beach bankruptcy attorney to determine whether your credit card debt could fall into the category of non-dischargeable debt.
Credit Card Debt is Often Dischargeable
Most people who file for consumer bankruptcy should be able to expect that their credit card debt can be discharged at the end of their bankruptcy case. Indeed, credit card debt is a common form of that that is discharged in individual bankruptcy cases, and it is frequently a reason that people file for Chapter 7 or Chapter 13 bankruptcy. According to data from debt.org, after medical debt, credit card debt is among the leading reasons that people file for bankruptcy and seek debt discharges.
Yet just because most credit card debt is dischargeable does not mean that you should automatically assume your debt can be discharged. It will be important to speak with a lawyer about the specifics of your credit card debt and whether it will be dischargeable in a Chapter 7 or Chapter 13 bankruptcy case.
Limitations to Credit Card Debt Discharge
What are some of the exceptions where credit card debt cannot be discharged in a consumer bankruptcy case? Generally speaking, credit card debt will not be dischargeable if any of the following are true:
- You obtained the credit card through fraudulent means (e.g., by providing false information on the credit card application);
- You charged “luxury goods” on your credit card during the 90-day period before you filed for bankruptcy; or
- You took a cash advance (or advances) from your credit card totaling more than $1,100 in the 70 days prior to filing your bankruptcy petition.
To be clear, you can use your credit card in the 90-day window or 70-day window prior to filing for bankruptcy if you need to charge necessities. Necessities might include, for example, food, rent, utility bills, or necessary supplies for work or school. Otherwise, anything that is not a necessity can be placed in the category of “luxury goods,” and can result in allegations of presumptive fraud. Indeed, charging luxury goods or taking a significant cash advance on your credit card before filing for bankruptcy may be considered presumptive fraud, even if you did not necessarily intend to commit fraud. None of these debts will be dischargeable in your bankruptcy case.
Contact a West Palm Beach Bankruptcy Lawyer
If you have questions about dischargeable debt, you should get in touch with an experienced West Palm Beach personal bankruptcy attorney at Kelley, Fulton, Kaplan & Eller as soon as possible.