I'm planning to file bankruptcy, Chapter 7. Can or should I use
my credit card up until I file? Will it have any consequences when
I do file? Is there a time span for using it before filing? Thanks.
When you realize that bankruptcy might be your
best option, you should: a) immediately contact an attorney to discuss
the timing of your filing, and b) stop using your credit cards.
However, there is no specific time span in which you must stop using
the cards to best assure your bankruptcy petition will be approved.
You see, not everyone who files Chapter 7 has all of his debts wiped
away. When you file your case, your creditors may pull up your account
and examine any recent financial activity. They're looking for what
you'd expect: cash advances, luxury purchases (like a $2,000 plasma
TV) and the pattern of your overall spending. If they object to
anything, even a purchase from six months ago, they file a motion
with the court to challenge your bankruptcy.
Both the court and your creditors are interested in your intent.
If your prefiling expenses can be justified as efforts to pay your
debts, that's good. If you bought a plasma TV, but have been responsible
otherwise, your attorney can negotiate a post-petition payment plan
with that particular creditor (otherwise you'll lose the TV). If
it looks like you're trying to take advantage of the system, you
can be denied bankruptcy altogether.
Justin Harelik is a practicing bankruptcy lawyer
in the Los Angeles office of Price Law Group. To ask a question
of the Bankruptcy Adviser go to the "Ask
the Experts" page, and select "bankruptcy" as