Archive for December, 2011

How to Miss Out On Discharging Credit Card Debt

Thursday, December 15th, 2011

Article From Bankruptcy Law Network, Dec. 15, 2011

Cathy Moran, California Bankruptcy Lawyer

Somewhere in our recent past, the holiday season became the shopping season.

Lots of people in financial trouble hang on through the holiday season before taking up bankruptcy as part of the New Year. (I haven’t seen many people give themselves a bankruptcy filing for Christmas, though, for many, it would be objectively the best thing under the tree.)

If bankruptcy may be in your future after the holidays, it pays to know how credit card debt is treated in bankruptcy. Welcome to the short list of ways to miss out on discharging credit cards in bankruptcy.

In the typical bankruptcy, credit cards make up the largest part of the unsecured debt. The basic premise in bankruptcy is that unsecured debt is dischargeable unless it appears on the list of non dischargeable  debts as in § 523(a). As the heading to the statute says, non dischargeable debts are exceptions to the rule of dischargeability.

There are two basic ways to blow your chance to discharge the balance on your credit card in bankruptcy:

  1. Lie on the credit application to get the credit
  2. Use the card fraudulently

Lie to get the card

If credit was granted to you on the basis of a false application , there’s a risk that the entire balance on the account could be non dischargeable. Suppose that you misstated your income , assets, or employment status to look more credit worthy. Those misstatements fall within the exception to discharge for debts created in reliance on a false statement in writing.

Use the card fraudulently

Credit card charges may survive a bankruptcy filing if they were incurred by false representations or actual fraud. Since no one plunks their card down with the announcement that they don’t really intend to pay the issuer, courts have had to find ways to infer what’s in your head when you make that purchase with plastic.

The legal fiction that has grown up is that when you present your plastic to pay for a purchase, you make a representation that you intend to pay the issuer. If that weren’t so, the entire credit card industry collapses.

Credit card issuers, then, are looking for evidence that the bankruptcy debtor didn’t intend to pay. They look to the facts that appear on the card statement and ask courts to infer from those facts the debtor’s state of mind.

What triggers the assumption the use was fraudulent?

  • Dramatic run up in account balance shortly before bankruptcy filing
  • Purchase of non essentials
  • No payments after significant purchases
  • Going over limit
  • Continuing use right up to bankruptcy

In the mean time, if you are considering filing bankruptcy, remember that your use of your credit cards, even within the card limits, is subject to scrutiny in your bankruptcy case. If proven fraudulent, those charges may be with you for the New Year and beyond.

If you would like more information on our practice, please consult our website at:
or call (727) 254-1704.

Chapter 7 Bankruptcy Lets You Cut Your Debt Losses and Move On.

Thursday, December 1st, 2011

Article by Andy Miofsky, Illinois Bankruptcy Attorney

Bankruptcy Law Network, Dec. 1, 2011

Sometimes it makes more sense to let go of the past and start building a new future.  Chapter 7 Bankruptcy can be your solution.

Does this debt arrangement conversation sound familiar?

Client: I want to make arrangements to pay this debt.

Me: Ok, how much can you offer to pay?

Client: Nothing, I don’t have any money?

Is it any wonder the bank will not work with you? Be realistic, creditors want cold hard cash, not talk, not arrangements. If you cannot make a payment, your arrangement, while well intentioned, is nothing more than an empty promise. It is time to check into reality.

Look, if you owe more money today than you did yesterday and you cannot pay your bills on time, you need to realize you are going in the wrong direction with your finances. You incur debt by spending money you do not have. If you do not have enough money to pay that debt you have to find another way to deal with it.

Money in, money out. If your income is insufficient to cover your debts you either need more income or less debt, or both. Bankruptcy won’t help you make more money but it can  discharge some types of debt. File that  Chapter 7  Bankruptcy, wipe out that debt, then you can use your money for the things you need, for you and your family and your future.

You might find it helpful to make a list of the items you can live without, and pare them from your budget. Then you can concentrate on a lifestyle you can afford. By taking a hard look at your expenses you can determine where your money goes and you can eliminate leakage – money that you spend on impulse or frivolous items. Shake off the past and live for the future. Life without debt is a goal you can achieve through  chapter 7 bank

If you would like more information on our practice, please consult our website at:
or call (727) 254-1704.