Maximizing A Debt Discharge

: Chris Lee Law Firm

  Filed under: Debt

debt dischargeOne of the most common debts that people hold when entering bankruptcy is unsecured debts. These are debts that are not secured against any property or asset as collateral, which make them more easily managed in the bankruptcy process. However, just because credit card debt is generally easily discharged in bankruptcy, doesn’t  mean that everyone who holds this type of debt will qualify. Before you file for bankruptcy, make sure you have not violated one of two important aspects to unsecured debts.

Snags In The System

There are two reasons why a bankruptcy court would deny a credit card debt discharge: (1) falsifying information to secure the card or (2) using the credit card fraudulently. Committing either one of these acts can quickly lead to a case dismissal, in which your debts will not be eligible for discharge.

Falsifying information is more common than you would think and many people have fallen into this trap. It usually occurs when people are denied credit cards or cannot secure the line of credit they would like, so they lie to the creditor to get approval for the line of credit. This can take many forms such as misstating your income, assets, lying about your employment status or using a false social security number. Remember that when you file for bankruptcy your financial details are closely scrutinized, which means that your attempt to conceal information will likely be revealed and cause you to lose your chance at a debt discharge.

Fraudulent use of a credit card is one of the main reasons why a debt would be denied discharge in a bankruptcy case and may lead to the entire case being dismissed. In general, there are a few actions that are considered fraudulent by the court. They include purchasing of non essential items, going over the credit limit, no payments after large purchases and continuing use right up until the bankruptcy filing. You cannot obtain a discharge on any debts over $500 acquired within 90 days of filing or any cash advances over $750 within 70 days of filing. Many people are unaware that their actions are considered fraudulent by the bankruptcy, only to find out when it is too late.

 

 


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