Using a credit card before filing bankruptcy is legal, but risky in a specific way: charges made close to your filing date can be carved out of your discharge, meaning you’ll still owe them after everything else is wiped out. Federal law creates two automatic red flags — large luxury purchases in the 90 days before filing and sizable cash advances in the 70 days before filing — and creditors can also challenge older charges if they can show you never intended to repay. Once bankruptcy is a realistic option, the safest choice is to stop charging.
The Two Bright-Line Traps
Federal bankruptcy law singles out two categories of pre-filing credit card activity and treats them as presumptively nondischargeable. That means the creditor doesn’t have to prove you committed fraud; the law assumes it, and you have to prove otherwise. The current thresholds were adjusted on April 1, 2025.1Federal Register. Adjustment of Certain Dollar Amounts Applicable to Bankruptcy Cases
The first trap covers luxury goods and services. Consumer debts totaling more than $900 to a single creditor for luxury items, charged within 90 days before filing, are presumed nondischargeable. “Luxury” here means anything not reasonably necessary for you or your dependents’ basic support. Expensive electronics, designer clothing, vacations, and elective cosmetic work all qualify. Groceries, basic clothing, medication, and similar essentials do not.
The second trap covers cash advances. Cash advances totaling more than $1,250, taken within 70 days before filing, are also presumed nondischargeable.2Office of the Law Revision Counsel. 11 US Code 523 – Exceptions to Discharge
These are presumptions, not final rulings. You can rebut them by showing the charges were genuinely necessary or that you reasonably expected to repay when you made them. But the burden is on you, and courts start out skeptical when someone runs up charges shortly before filing for debt relief.
Fraud Challenges Outside the Look-Back Windows
A common assumption is that charges made more than 90 days before filing are automatically safe. They aren’t. A creditor can still argue that any charge — six months old, a year old — was obtained through false pretenses or actual fraud.3Office of the Law Revision Counsel. 11 USC 523 – Exceptions to Discharge Outside the presumption windows, the creditor carries the burden of proof, but the legal path is well-worn.
Courts examine a set of factors to decide whether you intended to repay when you swiped the card. They look at how close the charges were to your filing date, whether you had already consulted a bankruptcy attorney, whether you exceeded your credit limit, whether you made multiple large charges on the same day, whether you were employed at the time, and whether your spending pattern suddenly changed. They also look at what you bought. Necessary items weigh in your favor. Splurges do not.4GovInfo. National Bankruptcy Review Commission Report – Consumer Bankruptcy
The windows just make the creditor’s job easier. Outside them, creditors can still win. They just have to work harder to show intent.
Balance Transfers Are Their Own Problem
Moving a balance from one card to another shortly before bankruptcy raises a separate concern. A balance transfer creates new debt with a new creditor. If a court finds you made the transfer knowing you’d file, the new creditor can argue you obtained credit through fraud. The closer the transfer is to your filing date, the worse it looks, even if the underlying debt is old. The transfer itself is what the court examines.
There’s no specific dollar threshold or look-back period for balance transfers. Creditors have to prove fraud using the same totality-of-circumstances analysis courts apply to any suspicious pre-filing activity. But the timing often tells the story on its own. Move $8,000 to a new card two weeks before filing, and expect the new creditor to object.
What Happens If a Creditor Objects
A creditor who believes a charge was fraudulently incurred files an adversary proceeding, which is a lawsuit inside your bankruptcy case. The creditor pays a $350 filing fee and either invokes the presumption or proves fraud directly.5United States Courts. Bankruptcy Court Miscellaneous Fee Schedule
If you lose, the specific debt survives your bankruptcy. You’ll owe it after your other debts are discharged. And the debt itself often isn’t the biggest cost. Defending an adversary proceeding typically requires at least 10 to 15 hours of attorney time, and contested cases can run two or three times that. Someone filing bankruptcy because they can’t pay their bills usually can’t absorb an unexpected legal fight either.
In extreme cases, a court can go further and deny your discharge entirely rather than just carving out one debt. A court can refuse to grant any discharge if you concealed or destroyed financial records, made false statements under oath, or hid property from the bankruptcy estate within one year before filing.6Office of the Law Revision Counsel. 11 USC 727 – Discharge A denied discharge means you went through the entire process and still owe every dollar.
One note on chapter choice: creditors are generally more motivated to bring these challenges in Chapter 7, where discharge wipes out their claim entirely, than in Chapter 13, where they receive at least partial repayment through the plan. Fraudulently incurred debts can still survive a Chapter 13 discharge, but objections are less common.
How to Protect Yourself
The single most useful step is to stop using credit cards as soon as bankruptcy becomes a realistic possibility. Every charge from that point forward is a charge a creditor can point to. Spending on genuine necessities like groceries, medication, and utilities is less likely to create problems, but even necessary charges look suspicious when they line up with bankruptcy planning. If you have essential expenses, pay in cash or use a debit card. Keep receipts for recent credit card purchases so you can show they were for basic needs if challenged.
Most bankruptcy attorneys recommend stopping all credit card use at least 90 days before filing, which matches the luxury-goods look-back window. Longer is better. The more time between your last charge and your filing date, the less ammunition a creditor has.
Talk to a bankruptcy attorney early. An attorney can review your recent statements, flag charges likely to draw objections, and tell you whether waiting a few additional months would move problematic charges outside the look-back windows or weaken a fraud argument. Attorney fees for a straightforward Chapter 7 case generally run $800 to $3,000, and Chapter 13 cases typically cost $2,500 to $7,500, though the numbers vary by location and complexity. Advice up front usually costs far less than defending challenges you could have avoided.