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Navigating the Debt Tightrope: Taking on New Debt Before Filing for Bankruptcy
Understanding the Risks and Rewards of Financial Choices on the Brink of Bankruptcy
There are numerous issues that should be weighted in advance when filing for bankruptcy. Apart from choosing between Chapter 7 or Chapter 13, one needs to decide about managing mounting debts, using credit cards, and taking new loans.
In this situation, the safest way is to stop creating new debts at least 90 days before the planned date of filing to avoid fraud accusations. But life doesn’t stop even before bankruptcy, and there will be bills to be paid and expenses to be covered. Here is a short synopsis of dos and don’ts when taking on new debts shortly before the bankruptcy filing.
When New Debts Might Be Dischargeable
Most often, those who intend to file for bankruptcy continue using their credit cards. Although the safest approach is to switch to debit cards, there are situations when limited use of the credit card can be considered a safe practice.
In such case, credit card use should be limited to paying for living essentials such as gas for the car, groceries, medical supplies and other necessities to sustain a living. As the credit card is wiped out after bankruptcy, the creditor will object to…
