In the last few years, the number of people filing bankruptcy in the month of January and February has increased a lot. This is because the debtors incur huge credit card debts during November and December while they buy gifts for their friends and relatives. However, the debtors want to have an easy recourse – they want to file bankruptcy and make a fresh start. But, things are not so easy. As per the bankruptcy code, this is known as "credit card binge" and Section 523(a)(2)(C) addresses this issue.
What does the bankruptcy code state?
Section 523(a)(2)(a) states that the debtor will not be able to get a discharge if he/she has incurred the debt under false pretenses, a false representation, or actual fraud.
As per section 523(a)(2)(C), debts payable to a single creditor (more than $500) for luxury goods incurred by a debtor on or within 90 days before the order for relief under bankruptcy is considered as non-dischargeable
Apart from this, cash advances which add to more than $750 that are extension of consumer credit under a revolving account which was obtained by the debtor on or within 70 days before the order for relief are considered to be non-dischargeable.
If you've incurred a huge credit card debt during the holiday season and plan to visit your bankruptcy attorney, be assured that he will advice you to wait for the next 5-6 months. Also, he would recommend you to make regular payments during this time.