When a debtor is filing for bankruptcy, the creditors usually take a close look at the debtor's spending habits and how they used their credit cards. The bankruptcy code protects creditors who contend that their debt on the credit card was incurred by fraud. Within a 60 day period of the 341 meeting creditors can file a lawsuit on the bankruptcy case challenging whether or not that should be discharged. The creditor is responsible to prove their case with the court. They must show all the transactions that are in question. The reason not many creditors pursue this is because many times it costs more to file the lawsuit then the amount they're going after. If it's not proven solidly the debtor usually will walk away from the debt anyway.
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90 days prior to filing for bankruptcy, debtors are supposed to stop using their credit cards. Many times it's a difficult argument for creditors to make because most of the debtors intended to repay the charges at the time of using the cards. Debtors should let their bankruptcy attorney know of all pre-bankruptcy credit card usage. Sometimes a bankruptcy attorney will ask the debtor to continue making the credit card payment until the bankruptcy is actually filed with the court. The only alternative if the money is not available to continue paying these cards is to delay the bankruptcy filing. It's always best to analyze the use of all your credit cards when filing for bankruptcy to prevent the likelihood of the creditors challenging the discharge of the credit card debt.
After the bankruptcy is discharged the debtor's credit report will be damaged for seven years for a Chapter 13 bankruptcy and 10 years for a Chapter 7. Individuals who have filed should remember that the bankruptcy can come back and haunt them when applying for financing and even sometimes when applying for employment. Before defaulting on your mortgage it's wise to discuss their financial problems with your lender and maybe you'll be able to work out some kind of plan. Burying your head in the sand because of fear won't make your problems just go away. Figuring out answers to your financial problems early enough can usually save a lot of headaches.
Most people that are thinking about filing bankruptcy are already at the end of their rope and there's not much else they can do. Filing bankruptcy isn't the end of the world, it's a new beginning. In this time of recession and financial crisis, unemployment and increasing home values, getting a fresh start with bankruptcy might not be such a bad idea. After filing for bankruptcy you can start establishing your credit score over a period of time. Recently, there have been many conservative financial consultants encouraging people to file for bankruptcy as an acceptable and reasonable way to deal with a personal financial crisis. If you're barely hanging on, don't wait too long, find a professional to speak with about your situation.
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