February 26, 2020

Will Recent Use of Credit Cards for Necessities Like Food and Clothing Prevent me from Filing Bankruptcy?

expensive litigationThere is no perfect time to file for bankruptcy.  Ideally, you should wait to file at a point when you have not touched your credit cards for several months and your credit card charges over the past year have not taken a big jump.  Further there is less chance that you will face any objection if you have made at least the minimum payment over the past 6 months or longer.

Section 523 of the Bankruptcy Code sets out a number of situations in which credit card debt will not be discharged.  Section 523(a)(2)( c) makes non-dischargeable consumer debt totaling more than $500 for luxury goods and services owed to any one creditor that are incurred within 90 days of filing, or cash advances totaling $750 or more owed to any one creditor made within 70 days of filing.

Section 523(a)(2) makes non-dischargeable debt owed to a creditor that was incurred by false pretenses or by fraud.

Basically, then, Section 523 gives credit card lenders at least two arguments to challenge a debtor:

  1. recent credit card use (within 3 months) for anything but necessities like food, clothing and shelter
  2. any credit card use in the recent past (in my experience this can be up to a year prior to filing) if a debtor makes charges where there is no reasonable expectation of repayment.   

Another way to look at this – if you have lost your job and for the last year your sole source of support are credit cards and cash advances, you should not expect to avoid a challenge by the credit card issuer just because you wait 91 days after your last use of your cards.

What, then, should you do if you need to buy food or gasoline in the weeks before you actually file?

First, you should recognize that shortly after you file, there is a very good chance that your credit cards will all be canceled and you are going to have to find another way to pay for your food and gasoline.  A bankruptcy may eliminate old debt but it will not help you pay your current or on-going bills.

Second, I advise my client that if they have to access their credit in the weeks and days before filing, I would choose one card – preferably a low interest card – and use that one only.  Expect that even if this card was used for food, gasoline and other necessities that you will have to pay some or all of it back.  If you can walk away from bankruptcy with 90% of your debt discharged, you will be better off than you are today and it is possible that any one creditor may not pursue a non-dischargeability complaint.

Three, as a practical matter you are not going to want to spend the money litigating Section 523 dischargeability actions.  Bankruptcy litigation is expensive and if you are scraping to buy food and gasoline, you will be able to afford litigation.  The fee you pay your bankruptcy lawyer will almost never include litigation.

Four, it is not always the worst idea to reaffirm one credit card, especially if it has a low balance and low interest rate.  Keeping one card can help you rebuild your credit quickly and some lenders will be open to aggressive negotiation on your part about balances and interest rates.

In my Atlanta area practice I often meet with a potential client weeks or months before we actually decide to file.  As such I encourage potential clients to call me as soon as they have any thoughts that bankruptcy may be even an unlikely option.  The more time we have to evaluate options and engage in pre-bankruptcy planning, the better.

About Jonathan

Jonathan Ginsberg represents honest, hardworking men and women in the Atlanta area who need personal bankruptcy protection. In practice for over 25 years, Jonathan teaches bankruptcy law and practice at legal continuing education seminars and he is a founding member of the Bankruptcy Law Network. Jonathan lives with his wife and children in Atlanta.


  1. Great blog by the way very informative.

  2. chapter7 bankruptcy says

    The bankruptcy petition. T-Boz filed a petition under Chapter 13 of the U.S. Bankruptcy Code, seeking a chance to repay her creditors over a period of three to five years. After filing the initial paperwork with the bankruptcy court, bankruptcy filers have a limited period of time in which to submit supplementary documents and paperwork. Failure to do so could result in the court dismissing your case.

    The repayment plan. Within 30 days of filing an initial petition, Chapter 13 filers are required to make the first payment according to the repayment plan they submitted. Those who don’t make this payment risk losing the court’s protection. T-Boz apparently listed more than $768,000 in debts, but made no effort to submit her first payment after filing her bankruptcy petition.

  3. Thanks.

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