Why Your Credit Card Company May Object To Your Discharge

Posted on

If you file for bankruptcy, your credit card company (alongside other creditors) is automatically informed of the case and has the chance to object to your discharge. While a bankruptcy discharge means that the company may at least get part of its money, it may object to the discharge under certain conditions. For example, a company may raise objections if you used its card to:

Pay Non-Dischargeable Obligations

Not all debts are dischargeable via bankruptcy; there are debts that you will still have to shoulder such as child support, alimony and student loans. If you use a credit card to pay any of these non-dischargeable obligations, then the creditor can object to its discharge. The argument for this is that you were planning to incur the debt with an intention of filing for bankruptcy and avoiding its payment. It's effectively the same as switching a non-dischargeable debt (like alimony) with a dischargeable one (credit card debt), and this may not be strictly fraud, but it is somewhere on the border.

Buy Luxury Items

Creditors may also object to your credit card debt if you incurred it on luxury items. Luxury items are those that you don't need to support yourself in your daily life. For example, you don't need a cruise vacation or the latest high definition television set to support your daily life. Therefore, if you used your credit card to book a weekend at a ski resort, then you can expect your credit card company to object to your discharge.

The creditor is likely to succeed if your purchase:

  • Was made within a certain number of days
  • Is above a minimum dollar amount

Get a Cash Advance

You will also have a problem with your discharge if you used it to get a cash advance. Again, for this objection to be considered, you should have made it in the recent past, and it must be of a certain aggregate value. This is because it isn't easy to tell what you wanted the money for; whether it was for necessary or unnecessary purposes. The credit card company might even argue that you were planning to take advantage of your upcoming (perhaps you had planned it in your head) discharge to get some "free" cash.

Therefore, if you are planning to file for a bankruptcy in the near future, or you have at least entertained the thought, you should be very careful with your credit card spending. You don't want these seemingly "small" issues to derail your discharge process. To learn more, contact a business like Wiesner & Frackowiak, LC.