Can I Use My Credit Cards Before Filing Bankruptcy in Utah?
Using a credit card shortly before filing bankruptcy is not automatically prohibited, but new charges can create serious problems. Depending on what was purchased, when the charges were made, and whether you intended to repay them, a credit-card company may argue that the debt should not be discharged.
For Utah residents considering Chapter 7 or Chapter 13 bankruptcy, the safest approach is to discuss recent credit-card activity with an attorney before filing—not to assume that every charge will simply be wiped out.
What happens if I use my credit cards right before filing bankruptcy?
Most ordinary unsecured credit-card debt can be discharged in bankruptcy. However, 11 U.S.C. § 523(a)(2) provides exceptions for certain debts obtained through false pretenses, false representations, or actual fraud.
A creditor might question charges made shortly before bankruptcy, especially if the circumstances suggest that the borrower did not intend to repay the money when the purchases were made. The timing of a charge is relevant, but it is not the only consideration.
What is the 90-day rule for credit card purchases before bankruptcy?
For cases filed under the dollar amounts effective April 1, 2025, more than $900 in consumer debt to a single creditor for luxury goods or services incurred within 90 days before filing is presumed nondischargeable. This is a rule about a presumption in a dischargeability dispute—not a blanket prohibition on using a credit card.
The presumption arises under 11 U.S.C. § 523(a)(2)(C). The dollar amounts are periodically adjusted. The current $900 threshold is confirmed by the federal bankruptcy courts’ 2025 adjustment notice.
Importantly, a presumption is not an automatic judgment against the debtor. The creditor still must pursue the appropriate bankruptcy-court process, and the debtor may have grounds to contest the claim.
What purchases are considered luxury goods?
The Bankruptcy Code specifically excludes goods or services reasonably necessary for the support or maintenance of the debtor or a dependent from the definition of luxury goods or services for this presumption.
Ordinary groceries and necessary household items generally look different from expensive vacations, discretionary electronics, or other nonessential spending. However, whether a particular charge is necessary depends on the facts, and even a charge outside the statutory luxury-goods presumption can potentially be challenged on a fraud theory.
What is the 70-day rule for credit card cash advances?
Cash advances totaling more than $1,250 from qualifying open-end consumer credit obtained within 70 days before filing are also presumed nondischargeable. This provision is separate from the 90-day luxury-purchase rule.
Cash withdrawals and other transactions treated as cash advances deserve special attention if bankruptcy is being considered. A debtor should provide an attorney with recent statements and a clear explanation of the transactions.
Are charges outside the 70-day or 90-day windows safe?
No. Neither window creates a safe harbor. A creditor may still challenge a debt under the general fraud provisions of § 523(a)(2), even when the special presumption does not apply. Evidence concerning intent to repay, the nature and size of the charges, payment history, financial circumstances, and the timing of the bankruptcy can matter.
There is no universal number of days you can wait that guarantees recent card charges will be discharged.
What if I used my credit card for groceries or other necessities?
Necessary living expenses are generally treated differently from luxury purchases for purposes of the 90-day statutory presumption. But that does not mean every necessary purchase is immune from a creditor’s fraud challenge. The facts surrounding the borrowing still matter.
If your income no longer covers living expenses and you are relying on credit cards to buy essentials, tell your bankruptcy attorney. That often helps explain the financial circumstances leading to the filing and identify any transactions needing closer review.
Should I make credit card payments before filing bankruptcy?
You should not assume that you must keep paying every unsecured card once bankruptcy is under consideration, or that you should stop every payment immediately. The right approach depends on your broader circumstances, including your secured debts, available cash, collection risks, and whether unusual payments to one creditor could raise other bankruptcy issues.
For example, payments to relatives shortly before filing present separate concerns. See Can I Pay Back Family Members Before Filing Bankruptcy in Utah?
What if the credit card company objects to my discharge?
A creditor seeking to except a credit-card debt from discharge based on fraud generally must bring a separate proceeding in the bankruptcy court and satisfy applicable deadlines. The court then determines whether the creditor has established a legal basis to exclude the debt from discharge.
That dispute concerns the particular debt; it does not necessarily mean that all of the debtor’s other qualifying debts will remain payable. The outcome depends on the evidence and the specific legal grounds raised.
Does Chapter 13 change the credit card rules?
Chapter 13 uses a repayment plan rather than the Chapter 7 liquidation process, but it does not automatically eliminate liability for debts established to be nondischargeable because of fraud. Section 1328(a)(2) incorporates the relevant § 523(a)(2) exceptions into an ordinary Chapter 13 discharge.
For more on the differences, read Chapter 7 vs. Chapter 13 Bankruptcy in Utah: Which One Fits Your Situation?
What should I do before filing bankruptcy if I recently used credit cards?
Be candid with your attorney and provide recent credit-card statements. Identify substantial purchases, cash advances, unusual balance activity, and any charges made after you began seriously considering bankruptcy. Do not conceal, mischaracterize, or attempt to reverse transactions without advice.
At Alta Legal, we review recent borrowing and other pre-filing activity as part of evaluating the best path forward. Learn more about Chapter 7 bankruptcy in Utah, or schedule a free consultation with Alta Legal or call 385-224-3765 to discuss your situation.
Disclaimer
This article is for general informational purposes only and is not legal advice. It does not create an attorney-client relationship. Consult a qualified attorney before making important legal or financial decisions based on your individual circumstances.