Using Your Credit Cards Prior To Personal Bankruptcy or Consumer Proposal

What would happen if someone went on a spending spree or took cash advances and maxed out all of their credit cards before filing personal bankruptcy or a consumer proposal?

As tempting as it sounds, borrowing money with the intent of not paying it back may be considered fraud, which is a criminal offence. While your creditors may not pursue criminal charges, they will review your credit card transactions for the year before your personal bankruptcy or consumer proposal and decide to take other actions based on their findings.

Debts from fraudulent activities are not discharged in personal bankruptcy or debt settlement through a consumer proposal. This means that these debts won’t go away, and the creditor could pursue recovery of the debt even though you filed personal bankruptcy or a consumer proposal.

If you file a consumer proposal and have recently run-up your credit card, that creditor will likely not vote in favour of your proposal. Which could increase the likelihood that personal bankruptcy will be necessary to resolve your debts.

When you file personal bankruptcy, your conduct of running-up a debt before bankruptcy could be used to oppose your discharge from bankruptcy. There will be a Court hearing to review your conduct.

The Court may require you to repay some or all of your debts; as a condition of your discharge from bankruptcy. The Court could also impose harsher penalties for your conduct, before your bankruptcy.

If you are having difficulty paying your debts, we recommend that you cease using your credit cards and contact a Licensed Insolvency Trustee to review your situation and discuss your options.

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Powell Associates Ltd. is a Licensed Insolvency Trustee. We are experienced, hands-on insolvency practitioners who understand the personal impacts of major financial stress;

• You won’t be stuck in an assembly line process.

• You will expect and receive prompt responses and resolution of issues from our supportive and experienced team.

• We will review your debt solution options, including filing a consumer proposal or personal bankruptcy.

• We help Canadians with overwhelming debt get fresh financial starts.

Once you file a consumer proposal or personal bankruptcy, we deal directly with your creditors on your behalf. Your unsecured creditors are required to stop contacting you or continuing legal proceedings against you. Contact us for a free consultation.

We offer free consultations to review your financial situation and practical debt resolution options. Contact us to discuss your situation over the phone, a video chat, or in-person in Saint John, Moncton, Fredericton, Charlottetown, Dartmouth, or Miramichi.