Under either of two legal theories, credit card debt may not be dischargeable in bankruptcy.
-- The submitted registration for the card was fraudulent.
-- The card was used without the intention to repay the balance.
Any """"luxury"""" purchase (such as costly jewelry) made on a credit card within 90 days prior to bankruptcy filing and any """"cash advance"""" made within 70 days prior to bankruptcy filing are presumed to have been fraudulently incurred. The debtor may rebut this presumption by demonstrating that he did not make luxury purchases or cash advances on a credit card without the intent to pay.
For instance, if a debtor was offered a high-paying job and then made luxury purchases or cash advances before the offer fell through, this would not constitute fraud. This would not constitute fraud if the debtor was employed and had sufficient income to make minimum credit card payments when he made the opulent purchases or cash advances, but then lost his job.
But if the debtor was unemployed and lacked a significant source of income to pay for costly charges at the time they were made, this could be considered fraudulent, particularly if the debtor charged up his credit cards shortly before filing for bankruptcy.
Unless the creditor submits an objection to the dischargeability of the debt, the question of whether or not certain credit card charges or other debts were fraudulently incurred does not typically arise during the bankruptcy process. In actuality, the majority of creditors do not file a complaint contesting the dischargeability of a debt, even in situations where they would likely prevail, because the attorney fees and judicial costs they would incur outweigh the potential benefit of a successful challenge.
Even if the creditor obtains an order of non-dischargeability, the debt will not be paid immediately. Simply, it indicates that the debtor still owes the creditor and that the creditor can attempt to collect after the bankruptcy.
Currently, a court filing fee of $250 is required to object to the dischargeability of a debt. Even in a straightforward and basic case, the creditor's attorney fees could easily range from $1,500 to $5,000 or more. Therefore, creditors rarely contest the dischargeability of credit card debts in bankruptcy proceedings unless the charges are substantial and there is clear evidence of fraud (such as an apparent spending spree shortly before filing for bankruptcy).
" - https://www.affordablecebu.com/