Credit card debt is one of the most common types of debt discharged in a bankruptcy. In most cases, no creditor disputes the dischargeability of credit card debt and the debt is readily discharged in the bankruptcy. However, credit card users facing bankruptcy need to be aware that there circumstances which may except certain credit card charges from being discharged.

The most frequently utilized exception to the discharge of credit card debt is found in 11 U.S.C. § 523(a)(2)(A):

A discharge under [a Chapter 7 general discharge], [Chapter 11 general discharge], [Chapter 12 general discharge], [Chapter 12 hardship discharge], or [Chapter 13 hardship discharge] … does not discharge an individual debtor from any debt–…for money, property, services, or an extension, renewal, or refinancing of credit, to the extent obtained by–false pretenses, a false representation, or actual fraud, other than a statement respecting the debtor’s or an insider’s financial condition.

While it is true that subsection (C) of 11 U.S.C. §523(a)(2) provides for a presumption of non-dischargeability arising when credit card purchases for luxury goods or services are made within ninety (90) days of filing bankruptcy and cash advances drawn within seventy (70) days of filing bankruptcy, some individuals believe that credit card debts will be discharged if they simply wait more than ninety (90) days from the date of incurring the debt to file their bankruptcy. This is not the case. Avoiding the presumption is only part of the battle.

Over the years, bankruptcy courts have recognized that revolving open credit accounts (i.e. credit cards) are different from other accounts when it comes to determining whether a charge to the account is to be construed as credit obtained by false pretenses, false representations, or actual fraud. While many honest debtors use credit cards and find themselves in financial trouble, some dishonest debtors run up credit balances with no intention of ever paying the debt.

If you or a loved one is in financial trouble, it is important to immediately stop incurring additional debt. This is true even if you are living on credit. Contact the qualified professionals at McGuire Gardner, PLLC to assist you in managing your financial situation. Many heartaches can be avoided with the help of competent professionals if you address your financial circumstances rather than allow them to compound.