Q:  May I take cash advances or make purchases on my credit cards prior to filing for bankruptcy relief?  

A: You should not. Debtors who take cash advances or make purchases on credit cards prior to filing may have to repay these debts regardless of the bankruptcy. Creditors can petition the court through an adversary/non-dischargeability action and obtain an order allowing the creditor to collect the debt despite the bankruptcy. This exception to discharge is based upon the belief that a debtor should not be able to eliminate a debt incurred while contemplating filing for bankruptcy relief.

Specifically, cash advances of $750.00 or more incurred within seventy (70) day prior to filing are presumed non-dischargeable under 11 U.S.C. §523(a)(2)(C). Also, credit used for luxury purchases totaling $500.00 or more within the ninety (90) days prior to filing are presumed to be non-dischargeable as well.

Attorneys and other legal service providers are required to advise debtors against incurring additional debt prior to filing for bankruptcy relief. Debtors who incur additional debt prior to filing do so at their own risk.  Debtors alone bear the consequence of incurring more debt shortly before filing for bankruptcy and may face the frustration and expense of defending against non-dischargeability actions.

Q:  What debt is not discharged in bankruptcy?

A:  Debtors will continue to owe the following non-dischargeable debts after bankruptcy (not an all inclusive list):

(1) Most student loans

(2) Most tax debt

(3) Alimony

(4) Child support

(5) Criminal fines or penalties

(6) Debts incurred through fraud

(7) Post-petition debts: Debts incurred after the bankruptcy case is filed

(8) Undisclosed or unlisted debts: Including debts owed to creditors listed with an incorrect address

(9) Luxury purchases: Incurred within ninety (90) days of filing of the bankruptcy filing for the purchase of luxury goods totaling more than $500.00.

(10) Cash advances: Incurred within seventy (70) days of the date of bankruptcy filing which total more than $750.00.

(11) Debts incurred while driving under the influence of drugs and/or alcohol

(12) Debts incurred through your willful or malice conduct

(13) Debts in a previous bankruptcy that were ordered non-dischargeable

(14) Debts incurred to pay non-dischargeable debts

(15) Debt for condominium or homeowner association fees that become due after filing for bankruptcy

(16) Secured debts if Client sold collateral without the creditor’s consent

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