Bankruptcy

Don't Use Your Credit Cards Within 90 Days of Filing Your Chapter 7 Bankruptcy in Arizona!

By Joseph McDaniel, Esq.

I have discussed at length the consequences of credit card use within 90 days of filing elsewhere.

The legal consequence is simple; there is a presumption that the credit card debt incurred during the period within 90 days of filing is not dischargeable.

It's a presumption that can be rebutted, but normally the debtor has already consulted with bankruptcy counsel, and that can make some difference in the attitude of the Judge.

Fortunately for everybody involved, that issue seldom arises because it's waaaay easier to deal with the issue now than it was twenty years ago.

There are so many bankruptcy cases now, and so therefore so many instances of the use of credit cards within 90 days of filing, that there's a standard operating procedure on the part of the banks.

The debtor is sent a nice letter detailing his credit card use within 90 days of filing.

The debtor is usually give a simple choice: pay it back in full, with a 20% discount for that lump sum payment, or reaffirm the portion of the credit card debt that represented the 90 day usage.

Frankly, that one's a no-brainer.

I've worked for three Judges, and two of them were bankruptcy judges, and one was the Chief U.S. Bankruptcy Judge for the District of Arizona.

Any one of the three would make short work of a nondischargeability complaint in which the debtor had swiped money off a credit card within 90 days of filing.

And frankly, I don't think any of them, specifically including Chief Bankruptcy Judge Caldwell, would have been sympathetic to use 91 days prior to filing.

That falls under the "Oh, no, you don't; too cute by half!" Rule.

NOTHING HERE CONSTITUTES LEGAL ADVICE RE A CHAPTER 7, CHAPTER 13, CHAPTER 11, OR CHAPTER 12. FIND AN ARIZONA BANKRUPTCY LAWYER WHO IS BOARD CERTIFIED IN BANKRUPTCY LAW, AV RATED, AVVO 10 RATED, ON SUPERLAWYERS, OR JUST VERY EXPERIENCED AND A FORMER CHAIR OF SOME BANKRUPTCY SECTION OR COMMITTEE. NOTHING HERE MAY BE USED AS LEGAL ADVICE IN CONNECTION WITH ANY BANKRUPTCY, WHETHER THAT BANKRUPTCY IS IN PHOENIX, GLENDALE, TEMPE, MESA, SCOTTSDALE, OR ANYWHERE ELSE.

Full post as published by Arizona Bankruptcy Attorney Blog on June 18, 2010 (boomark / email).