Typically, if a debtor meets the criteria for a chapter 7 bankruptcy, all unsecured debt is dischargeable, including credit card debt. However, if a creditor, such as a bank in connection with credit card debt, believes that certain debt was incurred by fraud, the bank may object to the discharge of such debt.
Although unusual, a creditor may contest the discharge of such debt by filing a “Complaint for the Non-Dischargeability of Debt”. The complaint is a lawsuit within the bankruptcy case, which is generally settled by agreeing to pay back a certain amount, on a monthly basis, over a reasonable time period. Please note that typically, with the exception of the settled amount, all other debt that is due to other creditors is discharged.
What facts will a creditor focus on, when deciding whether to object to the dischargeability of debt? Typically, the creditor will rely on the following facts: 1. did the debtor have sufficient income to pay for the charge; when was the charge, the day prior to the filing or five years prior to the filing; number of payments made on the debt; what was the money used for, a vacation, or food; etc.
Under the bankruptcy code, in the event that a debtor incurs over $500.00 of debt for luxury items, within 90 days of the filing, to any one creditor, the debt is presumed to be nondischargeable. Also, cash advances in excess of $750.00, within 90 days of the filing, is presumed to be nondischargeable. However, a “presumption” does not mean that is was fraud.
Also, if credit card debt that was incurred by fraudulent means, such as forging a person’s name, would be nondishcargeable.
The Law Offices of Robert Manchel is experienced in counseling individuals about possible fraud issues prior to filing, so as to prevent disastrous results with the courts of NJ. Please contact bankruptcy attorney Robert Manchel at 1-866-503-5655 for help and how bankruptcy protection and laws apply in your individual case.