Credit Card Debts and Bankruptcy

Credit Card Debts and Bankruptcy:
Chapter 7 and Chapter 13 allow you to discharge your unsecured debts, including credit card debts. When your bankruptcy is complete and all of the requirements are filed, you receive a bankruptcy “discharge” which means that creditors can no longer collect on most debts.
Any creditor can challenge your entire bankruptcy, but it is extremely rare for credit card companies to challenge the entire case. More frequently, though still rarely, they will challenge just the dischargeability of their credit card balance in the case.
Most of the grounds for objecting to the discharge of credit card debt involve some variety of fraud. Credit card charges can be challenged as non- dischargeable if:
1. If you charge over $600 of luxury goods within 90 days of filing your case, or you take cash advances totaling more than $875 within 70 days of filing, it will be presumed that you did these things fraudulently and you may have to pay.
2. If you misrepresent your assets or income on credit card applications, i.e. lie about your financial situation, it can mean that your credit card charges will be non-dischargeable.  
3. If you use your credit card in an unusual way just before filing, for example by paying all your utility bills the day before filing, then the creditor can argue that you never intended to pay these charges and the debt may be found non-dischargeable.
Thankfully, objections from credit card companies are rare, and where grounds do exist for an objection bankruptcy creditors usually realize that there isn’t much to be gained by filing a complaint in the bankruptcy court. Often times, if there is an issue, the debt can be settled for a fraction of the amount owed.
As always, preparation is the key to success in bankrutpcy matters, and questionable charges should be reviewed prior to filing a chapter 7 or chapter 13 case in Colorado.
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