Miami Bankruptcy Attorney Blog

Clients always ask me the following question “Can I go max out my credit cards and then come back and file for bankruptcy?”  The answer to that question is NO and it could lead to severe consequences including having the credit card companies sue you while you are in bankruptcy, and if they win the debt incurred will survive bankruptcy.

What do the credit card companies look for?

When you file your bankruptcy each credit card company, that you owed money to, will look back 90 days to determine whether or not you made charges on their card during that period.  Credit cards will look at the charges and determine if any of the charges are considered luxury goods.  A good rule of thumb is that anything other than food and gas is probably going to be considered a luxury good.  The credit card companies can sue you on anything they deem a luxury good. 

What do the courts look at to see if the debtor intended to defraud the creditor?

This is a non-exclusive list of factors that the court may use to determine whether or not the debtor, while using their credit card within the 90 day period before bankruptcy, intended to defraud the credit card.

1. 1.      The length of time between the charges made and the filing of bankruptcy
2. 2.      Whether or not an attorney has been consulted concerning the filing of bankruptcy before the charges were made
3. 3.      The number of charges made
4. 4.      The amount of the charges
5. 5.      The financial condition of the debtor at the time of the charges
6. 6.      Whether the charges were above the credit limit of the account
7. 7.      Whether the debtor made multiple charges on the same day
8. 8.      Whether or not the debtor was employed
9. 9.      The debtor’s prospects for employment
10. 10.   Financial sophistication of the debtor
11. 11.   Whether there was a sudden change in the debtor’s buying habits; and
12. 12.   Whether the purchases were made for luxuries or necessities

If you are thinking of filing for bankruptcy in the greater Fort Lauderdale-Miami area and would like to speak with a local bankruptcy attorney then please contact Ofer Shmucher at Shmucher Law, PL by calling 305.741.5553 or 954.309.5559.  We offer free consultations in our main Miami office as well as our satellite offices (by appointment) including Boca Raton, Fort Lauderdale, Plantation, and Sunrise Florida.

Clients that come see me tend to have one or two credit cards that they are current on.  These credit cards are typically low balance cards just for an emergency.  The client will usually ask me if they can keep these low balance credit cards after filing for bankruptcy in Florida, and unfortunately the answer to that question is NO.  Debtors will not be allowed to keep any credit cards they have, whether they are current, in default, or have been written off.

If you are worried about not having a credit card after filing for bankruptcy for an emergency use then it may be beneficial for you to get a secured credit card.   Otherwise you will be able to obtain credit card offers approximately three months after your bankruptcy case is over.

If you are thinking of filing for bankruptcy in the greater Miami-Fort Lauderdale area and would like to speak with a local bankruptcy attorney then please contact Ofer Shmucher at Shmucher Law, PL by calling 305.741.5553 or 954.309.5559.  We offer free consultations in our Miami office or any of our satellite offices (by appointment) including Boca Raton, Fort Lauderdale, Plantation, and Sunrise Florida.

If you haven’t paid your credit cards or any other debts for approximately nine months then your credit card company or whatever creditor you have will charge off your debt.   What charge off means is somewhat misleading .  When a creditor charges off debt they are really doing one of the following things:

Write Off the Debt –

Once a creditor charges off your debt they can simply write off the debt as “bad debt.”  When a creditor writes off your debt as bad debt what they are basically saying is that the debt is uncollectable and that they would rather get a small tax break on the bad debt, rather than continue spending money attempting to collect it.  Once a debt has been written off then the debtor will no longer be responsible for it.  Too good to be true right?  Well the fact of the matter is VERY few debts are ever written off as bad debt.  Typically only small debts, usually from small a small medical practice will ever be written off as bad debt.

3^rd Party Collections –

A creditor can send your charged off debt to a 3^rd party collections agency, which basically means they are selling your debt for pennies on the dollar to someone.  Once your charged off debt is sold to a 3^rd party collections agency prepare to be bombarded with phone calls to your home,  your work, your neighbors and finally your friends and family.

Turned over to an Attorney –

A creditor can turn over your charged off debt to an attorney.  When the debt is turned over to an attorney the attorney will begin by filing a demand letter.  Failure to make a payment arrangement based on the demand letter will lead the attorney to file a lawsuit against you and potentially garnishing your wages,  levy your property, or even freeze your bank account.

DON’T WORRY, if your debt has been charged off you can still file for bankruptcy.

If your debt has been charged off by your credit card company and you would like to speak with a bankruptcy attorney regarding your options then please contact Shmucher Law, PL at 954.309.5559 or 305.741.5553. We offer free consultations in any of our Bankruptcy Law  office locations in Boca Raton, Fort Lauderdale, Miami, Plantation, and Sunrise Florida.

Lots of clients come to my office and they have debt on their credit report that someone else has co-signed for, examples are cars and credit cards.  When the person files for bankruptcy he must list any co-signer on his/her bankruptcy petition to give the other party notice of the bankruptcy filing.  The person who is filing will likely have that debt discharged (wiped out in the bankruptcy).

If you are the person who co-signed the debt for the person that filed for bankruptcy, you will still be liable for that debt.  What that means is that the creditor will likely now turn to you to collect the monies owed.  This will likely mean frequent calls from debt collectors in an attempt to settle the debt and or eventually a lawsuit against you.

If you are thinking about filing for bankruptcy and would like to schedule a free consultation with a Southern Florida bankruptcy lawyer in any of our office locations:Miami, Plantation, Boca Raton, Fort Lauderdale, or Sunrise , Florida then please contact us at 954.309.5559 or 305.741.5553.

You  are relaxing at home on a typical day and then you receive a knock at your door.  You open the door and a process server greets you and asks you if you live there, you say you do, and he serves you with a summons and complaint.  You look at it more carefully and you see it’s a lawsuit from one of your credit card companies that is suing you for your unpaid balance plus interest plus attorneys fees.   You then immediately start to panic.

The filing of a civil lawsuit is just the start of the actions that a credit card company may take against you.  You will have twenty days to answer your complaint or the creditor will be able to get a default judgment against you.  You most likely have no defense to this lawsuit as you probably spent the money and you stopping making payments to collect.  Once they win their lawsuit (and they will), they will begin to attempt to collect on the monies owed.  They will begin their collection attempts by freezing your bank account(s), wage garnishing you if you have a job, or levying and selling your property (not including your home).

Fortunately, the filing of a bankruptcy can and will likely cease any actions against you by your credit card company.  The filing of the bankruptcy will immediately freeze any on going state court actions and in the case of a credit card lawsuit, will likely have the lawsuit be dismissed.  The creditor will not be able to wage garnish you, freeze your bank account, or even levy on your property.

If you have been sued by a credit card company, or believe that a suit against you is imminent and would like to schedule a free consultation to determine if bankruptcy is an option for you, then please contact Shmucher Law, PL at 954.309.5559 or 305.741.5553.  Our office locations include Boca Raton, Fort Lauderdale, Miami, Plantation, and Sunrise Florida.