Unfortunately, credit fraud may be presumed under certain circumstances. For instance, if you purchase luxury items of $500 or more on a credit card less than 90 days before filing for bankruptcy or take a cash advance of $750 or more, less than 70 days before filing, it is presumed to be non-dischargeable.
However, other circumstances may also lead creditors to presume that debts were accumulated fraudulently with no intention to pay them back.
Proving Debt is Not Credit Fraud
If luxury debt and cash advances do not fit the criteria above, then creditors must prove the debt was obtained fraudulently if they are to hold you to the obligation to pay it back. It may be difficult to prove fraudulent intent, but bankruptcy claimants should be proactive in defending themselves against such accusations.
You may be able to prove that the items were basic necessities like groceries. In some cases, you may prove that a major setback, such as a serious illness or natural disaster, necessitated purchase of the goods or taking a cash advance so close to the point at which you filed for bankruptcy.
Of course, the best method is to avoid the situation altogether. If you’re planning to file for bankruptcy, do not use your credit cards. If you made a purchase recently, wait to file for bankruptcy until after 90 days have passed from the time of purchase and continue making the payments in the meantime. What’s more, if you generally made payments on time before the bankruptcy filing, you may be able to use that to prove that you have a decent payment history.
Contact a Plano Bankruptcy Attorney
Don’t let creditors falsely accuse you of fraud. Legal help is available in Plano from a bankruptcy attorney at Warren & Migliaccio, L.L.P. Call us at (888) 584-9614 to discuss bankruptcy or an accusation of credit fraud.