When it comes to financial difficulties for individuals, credit cards are one of the biggest issues. There have been cases where individuals have filed a bankruptcy petition, listing a dozen or more credit cards together with another dozen or more store-based cards – all maxed out.  Some petitioners are surprised when their application for bankruptcy fails. There is a major reason for this.

Credit cards are problem areas when it comes to managing finances. The bankruptcy process evaluator looks very carefully at credit use patterns particularly in relation to spending during the 40 days prior to filing a petition (20 days when it come to cash withdrawals). If there is a marked increase in spending or cash withdrawals (in other words, if the credit cards are suddenly ‘maxed out’) then the matter is reviewed for potential fraud.

If you are having financial difficulties and you are contemplating filing a petition for bankruptcy, don’t look at those credit cards as an opportunity for a big spend before your finances are tied up. There is a good chance it may backfire on you. At the very least, the court may determine that these transactions should be treated as transactions made after the petition has been filed. This means those particular transactions will not be discharged and you will still be left with those debts to pay.

Bankruptcy is a serious matter that can have long term ramifications on your life. If you feel that bankruptcy is a serious consideration, don’t add any further debts. Instead, speak to a bankruptcy professional as early as possible. They may be able to suggest alternatives that won’t affect your long term credit worthiness. Maxing out your credit cards is certainly not the best idea.

Related posts:

  1. Why Some Credit Card Debts Are Not Discharged Through Bankruptcy
  2. Discharging Credit Card Debt Through Bankruptcy
  3. Credit Card Delinquency Rates Falling
  4. Shuffling Credit Card Debt To Avoid Bankruptcy
  5. The Sad Side Of Credit Card Debt