Expert: Norma Duenas - California Bankruptcy Attorney - 11/20/2009

Question
Chapter 7 Bankruptcy questions:

Q1. I hear that credit card use within 6 month prior to filing bankruptcy are not discharged, but must be paid. Is it true for any ocasions, for example grocery, medical, dental payment, etc.relatively small amount here and there, not for vacation or expensive sport car.

Q2. I also hear that IRA and other retirement accounts are exempt from being used to pay off the debt. Is it true even if IRA contribution is made within 6 months prior to filing bankruptcy? If yes, what if cash advance caheck from a credit card bank is deposited into an IRA? Is it still exempt?

Q3. What if financial situation changes after filing? For example, sudden income increase, gift, etc. that happen after filing? Are they irrevalent once filing is made and judgement is made solely based on the data submitted at the time of filing??  

Answer
Q1. Credit card use within the last 6 months is not the determining factor in whether the debt will be discharged. One of the factors that is used is whether you used the credit card without the intent to pay. Generally the longer time between the use of any credit card and the filing of your bankruptcy case, the less likely you will get a non-dischargeability challenge. Also cash advances of higher than $750 made within the last 70 days and purchases of luxury goods totaling more than $500 within the last 90 day before filing are presumed fradulent.

Q2. Generally IRA's are protected. The issue here may be if the cash advance that was taken is dischargeable  

Q3. On your bankruptcy petition, schedule I asks for any anticipated increase in income. If you anticipate any increase in income then you should note it on your schedule I. At your 341 hearing the trustee will generally ask if anything has changed since the case was filed, and if your income has changed you are required to disclose this information.

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