One of the most common contributing factors to people seeking bankruptcy protection is overwhelming credit card debt. Thus, it is essential for you to understand how your credit card debt will be treated in your bankruptcy filing. Typically, your credit card debt is fully discharged in a Chapter 7 or you pay a small percentage of what is owed in a Chapter 13 filing. However, pursuant to 11 U.S.C. §523(a), there are a few exceptions to the rule of dischargeability.
The two most common types of credit card debt to be excluded from discharge, include:
- Lies. If a debtor lies on his/her credit application in order to obtain a credit card, all of the purchases on the card can be held non-dischargeable. This means that the debtor must pay the debt even after the bankruptcy case is over. Examples of common lies are over-stating your income or under-stating your debt.
- False pretenses. If a debtor incurs charges by false representations or actual fraud, the debt can be non-dischargeable. This allegation commonly occurs when the debtor used the credit card to buy items with no intent to pay for them. Examples of fraudulent use of a credit card are buying frivolous items, maxing out the credit card, drastic increase in credit card use before bankruptcy filing and using the card right up to the petition date.
If you are planning to file a Chapter 7 or Chapter 13 case and you have concerns regarding the use of your credit cards, call DeLadurantey Law Office.
If you are considering filing for bankruptcy protection, call DeLadurantey Law Office, LLC, at (414) 377-0518. We believe that each client should receive the individual attention necessary to reach their financial goals. Recognizing the needs of working clients, we maintain a flexible schedule and offer evening appointments. Initial consultations are always free, and phones inquiries are always welcomed. Find us on the Internet and on Facebook.