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Is Credit Card Debt Dischargeable In Bankruptcy

      A common question that I seem to get from clients is whether credit card debt can be discharged in a bankruptcy.  As a bankruptcy attorney many of the cases that I handle involve some amount of credit card debt.  My answer to this common bankruptcy question is often the same.  As a general rule credit card debt is dischargeable.  However, that is a general rule and there are some exceptions that must be considered before filing a bankruptcy. 

     One exception to the rule that credit card debt is dischargeable in bankruptcy is whether the credit cards have been used for luxury services, luxury goods, or cash advances within the 90 days leading up to the date the bankruptcy case was filed.  If credit cards have been used for these types of items within that 90 day period than there is a legal presumption that the person knew they were going to file bankruptcy when using the credit cards and as such the lender could file a lawsuit ("adversary proceeding") against the person in bankruptcy court to get an order that those charges plus attorney fees are not dischargeable.

     Another exception to credit card debt being discharged in a bankruptcy is if the debt was incurred through fraud such as a material misrepresentation on the credit card application.  A common misrepresentation is the borrower stating an income that is in fact much greater than he or she actually has, and but for that misrepresentation the lender would never have issued the credit card.  If proven to the bankruptcy court than that credit card debt would not be discharged. 

     Those are just two examples of why a credit card debt may not be discharged in a chapter 7, chapter 13 , or any other chapter of bankruptcy.  It is important to hire a competent bankruptcy attorney before filing bankruptcy so these issues can be considered and properly handled.

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