It’s a tempting thought: since I’m going to file bankruptcy anyway, why not max out my credit cards? I’ve always wanted to go to Disneyland! I mean, hey, I’ve been paying on this credit card for years. They’ve gotten back way more than I owe them in interest.
Hopefully, you’re reading this before you put this brilliant plan into action. Unfortunately, this is another misconception that people have about bankruptcy: that you can run up your credit limits and then wipe out everything in bankruptcy. That doesn’t seem fair, does it?
No, it doesn’t. And in fact, the bankruptcy code has specific provisions to keep people from doing this.
Section 523(C) of the Bankruptcy Code excludes from discharge:
(I) consumer debts owed to a single creditor and aggregating more than $600for luxury goods or services incurred by an individual debtor on or within 90 days before the order for relief under this title are presumed to be nondischargeable; and(II) cash advances aggregating more than $875 that are extensions of consumer credit under an open end credit plan obtained by an individual debtor on or within 70 days before the order for relief under this title, are presumed to be nondischargeable; and(ii)for purposes of this subparagraph—(I) the terms “consumer”, “credit”, and “open end credit plan” have the same meanings as in section 103 of the Truth in Lending Act; and(II) the term “luxury goods or services” does not include goods or services reasonably necessary for the support or maintenance of the debtor or a dependent of the debtor.