How a Single Credit Card Can Ruin your Bankruptcy Application

Faced with losing all of their credit flexibility, bankruptcy applicants may try to keep one credit card out of the expunge proceedings. Just one can’t hurt, they’ll reason. How could it possibly matter if I just decide to pay one card and throw the remaining creditors into my plea for protection? Our PA and NJ bankruptcy lawyers cringe every time we hear a story of a client who attempts to pull off that maneuver in front of the court. This one seemingly irrelevant decision can derail the entire process and even cost them jail time.

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Bankruptcy Fraud is a Serious Crime

Opening up a credit card or loan when you’re weeks from filing for bankruptcy protection is a type of fraud. Here’s the basic math: you agree to pay off a debt within a certain number of years, but you know you’re already going through bankruptcy, which means the court will expunge said debt before you need to pay it off. You can’t use credit to purchase goods and services with the willful intention to never repay the debt. Bankruptcy does not allow you to commit theft. Attempting to do so will not only void your application, but it may also carry a prison sentence (five years worth) and a substantial fine.

Forms Completed Under Penalty of Perjury

When you fill out the forms required for your bankruptcy application, you do so with the knowledge that you have a legal obligation to tell the truth. These are court documents, and putting misleading information on that can be tantamount to perjury, a federal offense. When the documents ask you to list all your debts — list them. Don’t leave out a single credit card because you want to keep just one account open. That type of maneuver in front of a particularly shrewd judge could lead to your entire case landing on the courthouse steps.

Judgment Against You for Debts Owed

If you lie to the court and your creditor in taking out a credit card or loan within a few months of your bankruptcy, the creditor may be able to sue you for the debt owed. Your bankruptcy won’t protect you from the lawsuit because it can’t be included in your filing. This means you could emerge from bankruptcy with zero credit and a summary judgment leading to property liens and wage garnishment for the single card or loan you still owe. That type of ruined credit can make it difficult to find a job or a place to live. That’s two steps back without a step forward. Not exactly the clean start you were hoping for when you first considered filing for bankruptcy.

Going through a rough financial time and you’re not sure where to turn to for help? If your debt far exceeds your income, bankruptcy may be the right solution. Contact our law offices in New Jersey or Pennsylvania today for an immediate consultation with our bankruptcy legal team. We’ve handled thousands of claims and guided people just like you out of the woods to a brighter financial future. Don’t wait a second more to take charge of your finances — call today at (609) 755-3115 in New Jersey or (215) 701-6519 in Pennsylvania.

Have You:

Been paying credit card balances that seem to never go down?

Lost your job and are now having trouble keeping up?

Attempted to work out a payment arrangement to no avail?

Been notified of a mortgage foreclosure action?

Been denied for a mortgage or other line of credit?

If the answer to any of these questions is “yes” then bankruptcy may be an option that you should consider.

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