Legal Question in Bankruptcy in California

Re: Credit cards

I strongly recommend to debtors that they should not use their credit cards during the 90 days prior to filing for bankruptcy, or longer if possible. Bankruptcy law allows a credit card company to object to you receiving a discharge of that debt if they can prove the debt was incurred fraudulently (i.e. you didn't intend to repay it at the time you borrowed it).

Consumer debts owed to a single credit card company totaling more than $500 for luxury goods or services that were incurred within 90 days before the bankruptcy filing date are presumed to be fraudulent if the creditor files legal action to object to you receiving a discharge of these debts. The same presumption of fraud exists for cash advances totaling $750 or more during the 70 day period prior to the bankruptcy filing date.

Your right to receive a discharge could be vulnerable even if the purchases were made outside of the 90-day pre-filing period. The use of a credit card at a time when the debtor knew or should have known that he or she could not repay their debt can be considered as evidence that the debt was fraudulently occurred. Purchases made and cash advances made after retaining legal counsel would be particularly scrutinized.

Re: Credit cards

It is legal to take a cash advance. In some places it is legal to gamble. In Las Vegas, almost every casino has an ATM machine for the purpose of taking a cash advance for gambling purposes. Whether or not the debt can be eliminated in bankruptcy would be determined by the circumstances of the individual case.