West Palm Beach Bankruptcy Blog

8 Things a Bankruptcy Judge Might Look at to Determine if You Committed Credit-Card Fraud

When you file a petition with the bankruptcy court to declare bankruptcy, those individuals and businesses to whom you owe money (otherwise known as “creditors”) are allowed to file objections with the bankruptcy court stating why they believe that the debt owed to them should not be erased (or “discharged”) in the bankruptcy proceeding.

When it comes to credit-card companies filing such objections, bankruptcy judges look at some of the following things to determine if you committed credit-card fraud:

• Charges made after the credit-card company ordered you to return your card or sent you several “past due” notices.
• Recent charges for luxuries over $550.00 are presumed fraudulent.
• If you acquire more debt after consulting with a lawyer, a bankruptcy judge may conclude that you ran up your debts in anticipation of your filing for bankruptcy.
• Filing for bankruptcy soon after incurring charges might indicate fraudulent intent.
• Charges made when you were clearly unable to pay the minimum amount due on your credit-card bill (for example, you lost your job and had no other sources of income) are suspect.
• Multiple charges made on the same day.
• Changes in your pattern of spending (for example, you incurred a lot of charges related to travel expenses after not having previously traveled all that much).
• Multiple charges less than $50.00 (in order to avoid preclearance of the charge by the the credit-card company) after you have reached your credit limit.

The mere fact, however, that a credit-card company files an objection does not necessarily mean that the bankruptcy judge will rule in its favor.  If, for example, such a company objects that several of the charges appear to be fraudulent but does not explain why it believes that to be true, the judge may find that the company failed to prove its case and still discharge the debt in question.