December 21, 2009

By: Michelle Grinberg

Now that the holiday season is upon us, many individuals will charge up their credit cards and significantly increase their debts. If an individual chooses to file bankruptcy early in the New Year, creditors may allege that the debtor has made credit card charges without any intention of repaying the debt, thereby incurring the debt by fraud. Under the Bankruptcy Code Section 523, an individual debtor will not be discharged from any debt obtained by fraud. Further, there is a presumption of fraud if the debtor charges more than $500 on a single item less than 90 days prior to filing bankruptcy.

Buyers beware, if you already have debt and are considering filing bankruptcy, do not use the holiday season to increase your amount of debt believing that it will be discharged after filing.