Bankruptcy / Credit Card Negotiation

Bankruptcy Trustee: What's On Your Credit Card?

After filing for bankruptcy, a debtor’s credit card purchases will come under scrutiny by the bankruptcy trustee at the 341 meeting.  During the 341 meeting, the bankruptcy trustee will probably ask the debtor questions about what assets they purchased with their credit card and which of those assets do they still have.  For example, if a debtor purchased a scooter for $2,000 using a credit card, the bankruptcy trustee will want to know about it.  That scooter is considered an asset and may be liquidated during bankruptcy if it does not qualify for exemption status. However, to the surprise of many debtors, Texas bankruptcy law provides a generous amount of exemptions that can protect the majority of a debtor’s assets during their bankruptcy case.  While you will need to declare the existence and value of all of your assets, including small things like clothing, books and jewelry, usually the bankruptcy exemptions are high enough to protect the personal/intimate belongings of the average middle-class debtor during bankruptcy.

As far as credit card charges are concerned, most bankruptcy trustees will look at the past year of credit card purchases to determine if a debtor made credit card purchases without any intention or ability to repay the loan.  If the bankruptcy trustee determines that a debtor charged items to a credit card with no intention or ability to repay the charges, the debtor could be charged with a bankruptcy fraud crime and/or denied a discharge for those credit card charges.

To find out how your credit card purchases will be treated during bankruptcy, contact a Dallas-Fort Worth bankruptcy attorney.