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Bankruptcy on credit card


Can You Just Declare Bankruptcy on Your Credit Card Debt?

by Scott Thompson

Most credit card debt can be discharged in bankruptcy, but there are exceptions.

Credit card debt, like most other forms of debt, can usually be discharged by filing for bankruptcy. However, you can't file for bankruptcy on just your credit card debt while leaving your other debts out of it. If you do file for bankruptcy, you are legally required to report all your debt from every source. The bankruptcy court determines which debts can be discharged and which can't.

When you file for bankruptcy, you make a list of every debt you owe to any creditor. Some of these debts can be discharged by bankruptcy, and others can't. Debts that cannot generally be discharged by bankruptcy include taxes, student loans, alimony payments, child support payments, fines and court-ordered settlements for drunk-driving offenses. Most credit-card debts can be discharged by bankruptcy, but there are some exceptions. These include secured credit card debt and debt ruled by a court to be nondischargeable.

Most credit card debt is unsecured, meaning that there are no liens on the property you purchase with the credit card. Unsecured debt is usually discharged completely in Chapter 7 bankruptcy, but Chapter 13 bankruptcy may require you to pay a portion of what you owe. If you have a secured credit card, your creditors may have a lien on whatever you purchased. If this is the case, they can repossess these items for nonpayment even if you file for bankruptcy.

Complaints of Nondischargeability

If your creditors believe you may have used your credit card even though you knew you were going to file for bankruptcy, they can file a complaint of nondischargeability with the bankruptcy court. The court will examine the facts and make a ruling, but if they decide the debt is nondischargeable, you will be required to pay it despite filing for bankruptcy. Using your credit card with the intent of declaring bankruptcy is considered a type of fraud.

Resolving Dischargeability Issues

As of 2012, fraud is presumed to have occurred if you took out more than $875 cash on your credit card within 70 days prior to filing for bankruptcy, or if you purchased more than $600 worth of luxury items within 90 days prior to filing. Even if you actually had no intent to commit fraud at the time, the court will assume you did. The debt will not be ruled dischargeable unless you can provide the court with convincing evidence that you were not planning to file for bankruptcy at the time and that you intended to repay the debt when you incurred it.

Scott Thompson has been writing professionally since 1990, beginning with the "Pequawket Valley News." He is the author of nine published books on topics such as history, martial arts, poetry and fantasy fiction. His work has also appeared in "Talebones" magazine and the "Strange Pleasures" anthology.

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      Keep or withdraw money from Chase bank account before bankruptcy on Chase credit card

      Because of the wording in the title, there are two definitive and separate paths that need to be explored. One path is if the debtor has not yet filed the bankruptcy papers, but intends to do so fairly soon, within some weeks or a month. Most experts and legal advisers wrote that if this instance is true then the debtor should drain the account, but use the funds only for household needs. The debtor should keep a log of the money taken and its use. The reason for this is to assure the bankruptcy court that the draining of the account was not for simply hiding the money from the courts. If the courts thought that this was what occurred they would investigate and if found to be true, then fines and jail time would likely ensue. Many experienced, non-expert, non-legal people suggest putting a few months between the account draining and the actual filing for bankruptcy. If hiding the monies is the game, it cannot look like it to the courts. Timing of the withdrawal and time past since the withdrawal are points the assigned bankruptcy trustee will investigate to a point when it found that the account is essentially empty. Also, the amount taken will be a very important consideration. If it is several tens of thousands of dollars, just three or four months before, the trustee will very likely ask, and pursue, where this money went. The people experienced in this situation advised further to either withdraw the monies over a longer period of time, spending a fair amount on household purchases and some fixes, but to not fix up something to make it worth seizing and selling. Then, judiciously put the remaining amount somewhere for safekeeping. That is what some people advised.

      The other path occurs if the situation is that there is money in the account and bankruptcy papers have already been filed. If this is true, then, the debtor needs to withdraw whatever is needed to keep the debtor’s household running, log the money taken and how it was spent, and to not have a large amount on-hand. A source for what is reasonable will likely be the debtor’s state’s supplemental rules for bankruptcy exemptions. Several states, and nearly each one is different, have specific amounts of monies in accounts that bankruptcy cannot take, reserving it for the purposes of debtor household survival during bankruptcy proceedings. What will occur once a bankruptcy trustee is assigned, then available assets will be listed, preceding tax returns will be requested and reviewed. Any liquid assets, such as monetary or stock accounts will be liquidated based on the state’s exemption laws to pay off the creditors. The creditors themselves cannot touch any of the debtor’s assets while bankruptcy proceedings continue. The trustee will also ask about recent withdrawals from liquid accounts, to insure that the accounts were not drained in anticipation of the bankruptcy and the freezing of assets that might be seized for payment. Any fraud is severely dealt with by bankruptcy courts.

      How To Get a Credit Card After Bankruptcy

      Start Increasing Your Credit Score with a Secured Credit Card

      Rebuilding your credit profile is important after a bankruptcy. The sooner you are able to establish a good credit card score and show potential lenders that you can borrow responsibly, the sooner you will be able to borrow money for larger items, such as a house or car.

      Rebuilding can be easier than you may think, especially if no debts survived your bankruptcy. The steps below outline the best way to obtain credit cards after a bankruptcy.

      Although getting a prime card may be your ultimate goal, they can be hard or impossible to get directly out of bankruptcy. The best way to rebuild your credit profile — and work your way up to a prime card — is to start with a secured one. Before you apply for one such as this, make sure you understand the rules and limitations.

      These are cards where you will send the bank or company a security deposit and your credit limit will be the amount of your deposit. Secured cards after bankruptcy are a good start as they are issued by many trusted banks, who may be willing to send back your deposit and allow you to keep them after a reasonable timely payment history.

      This step is especially important for those who have a FICO score below 550. It’s true, you can use these to rebuild credit, but you need to have enough money for a security deposit first.

      After you have made timely payments on a secured card for some time, thereby increasing your credit score, you can try applying for a few store ones. These often have much smaller limits and less restrictive qualifying requirements than major ones.

      This means they will be easier to qualify for and easier to handle with their tiny limits. The drawback to this is that they also often have higher interest and penalty rates. You should not apply for any of these until your FICO is at least 550, preferably 600.

      After you have completed steps one and two, made timely payments to all of your cards, and let them age for a minimum of 6 months to 1 year, you may be ready to apply for a major one. There are prime and sub prime cards. Prime will have low to no fees, high limits, and will often also offer rewards for using them.

      Sub prime will come with high fees, low limits, and will not offer rewards. The longer you wait and let your secured and store cards age with a good payment history, the easier it will be to qualify for prime ones. However, if you are in a hurry to obtain a major unsecured card, then a sub prime will be your best option.

      Sub prime is usually reserved for those in the 550-650 FICO range. Once you hit 650, you may be able to qualify for some prime ones. Indeed, unsecured cards after bankruptcy are still achievable when you have the right strategy.

      When deciding what to apply for and when to apply for it, remember that there are other factors to consider besides the time since your bankruptcy. For example, if a negative account survived your bankruptcy (this usually happens with student loans that have gone into default), it may take more time in steps one and two before you graduate to step three.

      The good news is that, the more time you take to rebuild now, the more options you will have in the future. Now that you know how to get a credit card after bankruptcy, start looking for credit card applications that meet your needs. Source

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      At What Amount Should You File Bankruptcy on Credit Card Debt in Philadelphia?

      Bankruptcy on credit card

      Credit card debt exerts a heavy financial burden on most American households, including thousands of households right here in Pennsylvania. In fact, according to credit rating agency TransUnion, the average Pennsylvanian has about $4,600 in credit card debt. The question is, how much credit card is too much? And at what point should filing bankruptcy become a consideration? Continue reading to hear bankruptcy attorneys in Philadelphia discuss bankruptcy and credit card debt – including what can happen if you run up your credit cards before filing bankruptcy.

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      What is the Minimum Debt to File Bankruptcy in Pennsylvania?

      A credit card can be a double-edged sword. On one hand, credit cards are a convenient way to build credit, enjoy greater financial flexibility, and pay for everyday expenses, all without the hassle or danger of carrying cash around. On the other hand, credit cards can lead even the most responsible cardholders to unintentionally rack up huge amounts of debt.

      Contrary to popular belief, credit card debt doesn’t always result from excessive shopping and overspending. Even if the cardholder spends within perfectly reasonable limits, an unforeseeable setback, such as an injury or the loss of a job, can make it burdensome if not impossible to keep up with monthly payments. Then, once a cardholder falls behind, penalties like fees and high interest rates begin to accrue. In many cases, it’s only a matter of time before these penalties snowball into a financial catastrophe for the cardholder.

      The good news is that bankruptcy can reduce or even erase your credit card debt. But is bankruptcy truly necessary in your situation?

      The answer to that question depends on a few factors, including how much credit card debt you have, how much debt you have from other sources, and what your overall financial goals are. When you contact the Philadelphia Chapter 7 bankruptcy lawyers or Chapter 13 bankruptcy attorneys of Sadek & Cooper for your free bankruptcy consultation, we can talk about all of these issues in detail, including other important information like your income and assets. Because our law firm handles both bankruptcy and alternatives to bankruptcy, we are thoroughly prepared to help you compare your options in depth.

      Without knowing any information about your debts, income, or assets, it’s impossible to gauge whether filing bankruptcy would be the best and most appropriate way to address your credit card debt. However, in advance of your consultation, we can offer some general information about eliminating credit card debt with bankruptcy:

      • Alternatives to bankruptcy could work better for you. Bankruptcy is great for certain debtors, but isn’t the ideal approach to every situation. For example, if you’re struggling to make your minimum payments, you might be a good candidate for debt consolidation. It’s important to review your options with a Philadelphia bankruptcy alternatives lawyer who can educate you about the short-term and long-term consequences of each financial strategy. Depending on how deep in debt you are, budgeting more aggressively and making simple lifestyle changes could be enough to solve the problem.
      • There is no “minimum amount of debt” to file bankruptcy. Your credit card debt does not need to meet a minimum threshold before you file bankruptcy. Some debtors have a few thousand dollars in debt, while others have tens or hundreds of thousands. However, there are maximum thresholds. If your unsecured debt (which includes credit card debt) exceeds $394,725, you will be prohibited from filing Chapter 13. But with that in mind…
      • Debt isn’t the only reason to file bankruptcy. Even if your total amount of credit card debt is relatively low, filing bankruptcy could still be advantageous for other reasons. For example, bankruptcy’s “automatic stay” can put a stop to debt collectors and utility shut-offs. If credit card debt has caused you additional financial problems, such as difficulty paying off your mortgage or car loans, bankruptcy can also help you avoid foreclosure and repossession.

      Ultimately, there are many reasons to consider filing bankruptcy, even if credit card debt plays only a small role in your financial difficulties.

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      Using Credit Cards Before Chapter 7 or Chapter 13 Bankruptcy

      As a final word of caution, it’s a very bad idea to run up your credit card before bankruptcy, both a legal and financial standpoint. The reason is simple: it’s a form of fraud.

      If you intentionally run up huge credit card charges with the intent to file bankruptcy afterward, your credit card company can file a complaint asking the bankruptcy court to deny your discharge, which is what eliminates the debt. If the bankruptcy court agrees with the credit card company, it will declare your credit card debt to be non-dischargeable, which means you will not be able to wipe out the debt.

      If a debt is declared non-dischargeable, it has to be paid off. Only dischargeable debts – which credit card debts typically are, absent fraud or other problems – can be wiped out in bankruptcy.

      Philadelphia Bankruptcy Lawyers Can Help You Eliminate Credit Card Debt

      Don’t let anxiety about credit card bills continue to control your life. If debt is causing problems for you, help is available 24 hours a day, seven days a week. Get the fresh start you deserve by filing Chapter 7, filing Chapter 13, or exploring alternatives to bankruptcy in Pennsylvania.

      To learn more about eliminating your credit card debt in a free and confidential legal consultation, call the Philadelphia credit card debt lawyers of Sadek & Cooper Law Offices at (215) 995-2543 today. We proudly serve Philadelphia County, Delaware County, Montgomery County, and beyond.