In Chapter 7 bankruptcy cases, credit card debts are treated like any other unsecured claim. If your assets have been liquidated and there is enough to pay off the credit card debt, your bankruptcy trustee will do so. However, if there is debt left over after your claim has been allowed and the funds from the liquidation process have been exhausted, you are under no obligation to pay off the debt. However, in some cases, your credit card company might reject your bankruptcy claim.
Can They Really Do That?
Because challenging your entire bankruptcy claim would be very costly for the credit card company, it is extremely unlikely they will do so. Instead, it could try and cause trouble by objecting to the discharge of only that particular debt. The company might even try to get the court to dismiss your claim by trying to prove that the filing is an abuse of the system; when you should be filing under Chapter 13 and not Chapter 7, for example.
There are a number of grounds on which your credit card company can reject your bankruptcy claim. It is never a good idea to file for bankruptcy without hiring an experienced lawyer first. Otherwise, there is a good chance that you will make some mistake, which could lead to your claim getting rejected.
Some Credit Card Debts Are Non-Dischargable In A Bankruptcy Claim
Your bankruptcy claim will only be rejected if the company can prove that the card charges were incurred through willful misrepresentation, fraud or under false pretenses. There are two circumstances under which credit card charges are presumed to be fraudulent:
Cash advances: If you have used your credit card to get a cash advance of at least $925 within the prior 70 days of filing bankruptcy, the debt is presumed non-dischargeable. Where you have spent the money is not given much consideration.
Luxury goods: If your credit card has been used to buy luxury goods worth at least $650 within the 90 days prior to filing bankruptcy, the debt is considered non-dischargeable. Goods or services which are not absolutely necessary for you and your family’s support or maintenance are considered luxury goods. Items like clothing, gasoline, food, etc. are generally not considered luxury goods.
If you have incurred charges to your credit card that are believed to be fraudulent, it is up to you to prove otherwise. Unless you have hired an experienced attorney, it could be very difficult to show that you actually believed you could pay off the debt when you incurred it.
If your credit card company intends to reject your bankruptcy claim, it should file a complaint with the court within 60 days of the first meeting of your creditors. After the company files a complaint, you should respond in a timely manner. When the hearing is due, your bankruptcy attorney will argue your case before the court, and could be successful in getting a judgment in your favor.
If you have significant credit card debt and are considering filing for bankruptcy, it is very important that you hire the services of an experienced attorney as soon as possible. These types of cases can be very complex and without the aid of an experienced bankruptcy lawyer, your case may not be very strong and you will likely be unprepared in the event that your credit card company tries to reject your bankruptcy claim.
The Law Firm of Joel Aresty, P.A. is well versed in Florida bankruptcy laws and can assist you with your bankruptcy filing. Call today for a consultation at 1-855-DOC-LAWS.