Many people associate the holiday season with financial strain, and this pressure can feel amplified for those who have recently declared bankruptcy. One common concern is regarding credit cards and holiday expenses. Can you still use credit cards while the bankruptcy process is ongoing?
Bankruptcy laws place restrictions on your financial activities
When you file for bankruptcy, your financial situation changes dramatically. Here are some key takeaways to consider:
- Credit card use is restricted: If you filed for Chapter 7 bankruptcy, you generally cannot use credit cards at all. In Chapter 13 bankruptcy, you might be able to do so, but with strict limitations.
- Credit card companies may cancel your account: Even if the court allows you to use your credit card, the credit card company may cancel your account or reduce your credit limit due to your bankruptcy filing.
- New debts are usually not dischargeable: Incurring new debt may disqualify that debt from discharge in the bankruptcy process.
- Bankruptcy trustee may object: The bankruptcy trustee responsible for overseeing your bankruptcy case may contest the use of credit cards during bankruptcy.
Using credit cards without permission could jeopardize your case. The court might dismiss your bankruptcy petition or deny the discharge of your debts. In severe cases, you could encounter criminal charges for fraud.
Regardless of whether your credit cards remain active after filing, using them is risky. Credit card companies may argue that you took on debt with no intention of repaying it. Bankruptcy protection may not cover that specific debt.
Seeking legal help to achieve a fresh start is crucial
While the holiday season may put pressure on your finances, it is crucial to prioritize your long-term financial health. An experienced attorney can guide you toward making decisions that align with your bankruptcy plan and set you on the path to financial recovery.