Posted by David Leibowitz on March 17th, 2009 in Bankruptcy, Chapter 7, Legal, Convenience Checks, Credit Cards
If you’re thinking about bankruptcy, you probably don’t have very much spare cash. On the other hand, you may have plenty of credit. Many of our clients have very high credit scores and have been paying the balances on their credit cards for years. Credit cards often send these people “convenience checks.” This allows the card-holder to write a check and borrow money at very high credit card rates. If you do that anytime close to bankruptcy, you can be very sure that the credit card will want you to pay the money back even though you declared bankruptcy. If you file a bankruptcy case, cash advances made within a few months of the filing will be highly suspect. In fact, you would have to prove that you actually intended to pay the money back. The court will assume that you did not.
That will put you in the very bad position of having to pay back a debt even though you filed a bankruptcy case and thought you would discharge it. It’s a much different case than using your credit card to buy a week’s worth of groceries or paying a medical bill. And it’s different than buying a car before bankruptcy while you still have credit and intending to keep the payments up afterwards.
When you first visit your bankruptcy attorney, be sure to find out what you can do and can’t do until you actually file your bankruptcy case. What you don’t know can hurt you very badly.