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Can I file bankruptcy now that I have run up my credit cards?

Can I File Bankruptcy Now That I Have Run Up My Credit Cards?

The Holiday Season is now done and over. You have run up your credit cards on your shopping and you are now ready to file for bankruptcy here in the Akron, Canton, New Philadelphia, Cleveland, and Wooster area. But can you go ahead and file right away?

The Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) has rules about filing for bankruptcy. 11USC 707(b)(3) states that a case filed in bad faith could be forced to be dismissed from a Chapter 7 or convert to a Chapter 11 or Chapter 13.

So what does this mean? If you were thinking about filing for bankruptcy and then you go ahead and run up your credit cards, the US Trustee or the Trustee or the creditor could challenge your bankruptcy in Court. They will look at the time frame from when you ran up a lot of debt and when you filed for bankruptcy. The Trustee will ask you, the debtor, when did you first meet with a bankruptcy attorney? They ask this question because if you met with a bankruptcy attorney and then ran up your debts, this would be a sign of bad faith.

The bottom line is if you are planning to file for bankruptcy, don't run up your debt. This is bad faith. It becomes clear you are trying to abuse the Bankruptcy system.

Another example of what people sometimes try to do before filing for bankruptcy is hiding money. A person for example may have won a lawsuit and then they transfer the money to another person's bank account. Then this person claims it is not their money. This is not only bad faith but concealing an asset. There could also be criminal consequences for this behavior. It is always better to be honest when filing.

BAPCPA also doesn't allow a debt owed to a single creditor that is more than $500 for luxury goods or services incurred within 90 days to be discharged as long as the creditor brings an adversary proceeding into the case. This also applies to cash advances of more than $750.

So if you are planning to file for bankruptcy now that the holidays are over, you may need to wait a little before filing. You need to consult a bankruptcy attorney in the Akron, Canton, Wooster, New Philadelphia, Cleveland area to find out what your options are.

Submitted on 1/1/2015

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