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Credit Card Debt and Chapter 7

The holidays have ended and many Americans are finding themselves with mounds of credit card debt and are considering taking out loans, or cashing in meager savings to pay these credit card bills. If you find yourself in that situation, a Chapter 7 bankruptcy may be helpful to you and your family.

Chapter 7 bankruptcy will usually assist debtors to discharge (wipe out) credit card debts. There are some exceptions to discharge of credit card debts which we will explain below:

  • If your credit card charges are incurred through actual fraud, such as a misrepresentation on your application for credit of your income, the debt may be considered nondischargeable. However, the creditor would have to raise this issue, and one of our experienced attorneys would be happy to review the facts and circumstances surrounding this issue.
  • Also, if you purchase $650.00 worth of luxury goods within 90 days of filing for bankruptcy, the debt is presumed nondischargeable. However, bankruptcy law defines "luxury goods or services" to exclude "goods or services reasonably necessary for the support or maintenance" of you or your dependents. Food, medical bills, clothing, utility payments, and gasoline, for example, are not ordinarily considered to be luxury goods.
  • Also, $925 in cash advances within 70 days of filing bankruptcy is presumed to be nondischargeable, whether you use the advance for luxury goods or anything else.
  • The exceptions to discharge for luxury goods and cash advances are not absolute and the onus is on the creditor to object to discharge.

One of our experienced attorneys can review your particular situation and see if you would still qualify for a Chapter7 bankruptcy. With the start of a new year, you deserve a fresh start! Contact us today!

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