June 13, 2006
Credit card use in bankruptcy
If you are in debt and see no way of repaying it then filing for bankruptcy may be a good option for you. It will not only help you get a fresh start, you can also save the skin on your backs if you are careful. Here is a list of the common mistakes that people make when filing and how you can avoid them.
Once you’ve decided to file for bankruptcy, one of the first things you need to do is stay away from your credit cards. If within 90 days of filing, you incur a debt for luxury goods and services and owe in excess of $500 to a single creditor, then this amount is presumed to be nondischargeable. This means you will have to pay up. If you have a retirement account, don’t make the mistake of draining it to pay down your credit card. A retirement account is generally protected, which means that you can eliminate your debt and keep whatever you have in an ERISA qualified account, free and clear.
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