If you are considering filing for bankruptcy in Maryland, one of the most common questions is whether you should stop using your credit cards. The short answer is yes. Using credit cards shortly before filing for bankruptcy can create complications that may delay your case or even lead to certain debts not being discharged. It is important to understand the timing, the rules, and what may or may not be considered fraudulent behavior.
Answering the Question: How Long Before Filing for Bankruptcy Are You Supposed to Stop Using Credit Cards?
When to Stop Using Credit Cards Before Filing Chapter 7
Most bankruptcy attorneys will advise you to stop using your credit cards at least 90 days before you file for bankruptcy. That is because recent charges made just before filing are often reviewed more closely by creditors and trustees.
If you are charging luxury goods or taking out cash advances shortly before filing, these may be viewed as bad faith purchases. The court may assume you never intended to repay these debts, which could make them non-dischargeable. Waiting at least three months gives you a safer timeline, but every situation is different, and speaking with a qualified attorney is the best way to avoid mistakes.
Why You Should Stop Using Credit Cards Before Bankruptcy
Using credit cards before filing can cause two major problems:
1. It can delay your case.
If a creditor challenges your filing by claiming you ran up charges without intent to repay, the process could be delayed until the issue is resolved.
2. You may still owe the debt.
Even if you file for bankruptcy, charges made shortly before filing may not be wiped out if they are seen as fraudulent.
Stopping credit card use shows the court that you are acting in good faith and truly need financial relief, rather than trying to take advantage of the system.
You Can Use Credit Cards for Things You Need Before Bankruptcy
In some situations, using your credit card for basic living expenses may be acceptable, especially if you are not yet sure whether you will file. For example, using a credit card for gas, groceries, or medicine could be considered reasonable.
However, using credit cards for large, unnecessary purchases or for cash advances should be avoided. The court will look closely at the nature of your spending. If the charges were made out of necessity and not with fraudulent intent, they are more likely to be discharged. Still, it is always better to limit any spending as soon as bankruptcy becomes a consideration.
How Credit Card Companies Object to Bankruptcy Discharges
Credit card companies can file objections if they believe you used your card irresponsibly in the months leading up to your bankruptcy filing. This often happens when:
- You took out large cash advances
- You bought luxury items
- You charged more than $800 to a single creditor within 90 days of filing
These are considered red flags. If the creditor files an objection and wins, the court may rule that those specific debts cannot be eliminated through bankruptcy. That means you will still owe them, even after receiving a discharge for your other debts.
When to Stop Paying Credit Cards Before Bankruptcy
Once you have decided to file for bankruptcy, continuing to pay credit card bills may not be necessary. In fact, making minimum payments while falling behind on necessities like rent, utilities, or car payments may not be the best use of your limited funds.
Your attorney can help you decide when to stop paying credit cards. In most Chapter 7 filings, unsecured credit card debt is discharged, meaning you will no longer be responsible for it. That said, never stop paying until you have consulted with a bankruptcy attorney and have a filing strategy in place.
Navigating Your Bankruptcy Case
1. Initial Consultation
You will meet with a bankruptcy attorney to review your income, debts, and assets.
2. Document Collection
Your attorney will help you gather necessary financial information.
3. Pre-filing Counseling
You must complete a credit counseling course before you can file.
4. Filing the Petition
Once the paperwork is ready, your attorney will file your bankruptcy petition with the court.
5. Creditor Meeting
You will attend a brief meeting with a trustee to confirm your financial information.
6. Discharge
If all goes smoothly, your debts are discharged within a few months (for Chapter 7), and you get a fresh financial start.
Ready To File For Bankruptcy in Maryland? Contact The Law Offices of Nicholas J. Del Pizzo
If you are struggling with debt and wondering when to stop using your credit cards or how to safely prepare for bankruptcy, it is time to speak with an experienced attorney. At The Law Offices of Nicholas J. Del Pizzo, we help residents in Baltimore and Dundalk, Maryland make smart decisions during difficult financial times.
We will walk you through every step of the process, help you avoid common mistakes, and ensure your case is filed correctly and efficiently. Contact us today for a free consultation and take the first step toward a stronger financial future.