In addition to advising my clients to stop charging in preparation for their bankruptcy filing – once I meet with them, I have to advise them that in some rare cases a creditor will object to the discharge of certain recently incurred charges.
 
The creditors have 60 days from the date first set for the meeting of creditors, to object to the discharge of specific debts in your bankruptcy.
 
One such ground for objection is that the debt was incurred by fraud or misrepresentation other than a misreprentation of your financial condition.
 
The hardest way for a creditor to prove such a misrepresentation is to prove that you did not intend to repay the debt when you incurred it. This is not easy.
 
A simpler way is through the use of a presumption of which there are two in that section of the Bankruptcy Code. The first is if you charged more than $500 in luxury goods or services with 90 days of the filing. If they can prove this than the burden of proof shifts to you to prove the absence of fraud or that you intended to pay in order to rebut this presumption. The second presumption of fraud applies if you have taken out more than $750 in cash advances within 70 days of filing. Again this presumption can be rebutted, but the burden of proof shifts to you if the creditir can prove up the facts giving rise the predumption.
 
The best thing to do is to avoid charges especially cash advances soon before you file. Even where you had no choice all is not lost. The number of challenges are few, but it can happen to you. A worst case scenario is just that the particular debt is not discharged. Also if the creditor loses the challenge they have to pay your attorneys fees for defending you.