When Credit Card Discharge Can Be Challenged in Chapter 7 Bankruptcy

There are circumstances that could cause your credit card issuer to challenge whether the credit card debt should be discharged in a bankruptcy filing.

These challenges almost always arise when fraud is suspected. Unfortunately, some people seeking bankruptcy debt relief have committed fraud without intending to. The 2 primary considerations for fraud are:

• The credit card application was not accurately filled out, appearing that the applicant was intentionally trying to provide deceptive information such as social security number, address, or phone number.
• The credit card was used by the applicant with no reasonable intention of repayment. The criteria that might indicate this type of usage are:
• Increased card usage before the bankruptcy filing
• New card issued shortly before the bankruptcy filing
• More than usual cash advances before the bankruptcy filing
• Large cash advances before the bankruptcy filing
• Use of card for travel or luxury items before the bankruptcy filing
• Stopping payments on one card while continuing to use another card
• Charges made after consulting with a bankruptcy attorney

To contest specific charges or all of the credit card balance, the card issuer would have to file an adversary proceeding. If that happens, it is important to have an experienced bankruptcy lawyer represent you.

But even more important, you will want to consult with a qualified bankruptcy attorney in Phoenix, Arizona, to make sure that – BEFORE FILING – you have looked at the possible scenarios above and discussed whether any of them may apply to you. A reputable bankruptcy law firm will help you understand the options available to you before you file for bankruptcy.