A creditor may challenge the discharge of a debt in bankruptcy if it believes the debt was incurred by fraud.
In the credit card context, that usually means that the creditor alleges that either the card was obtained by using false information, or, more frequently, that the use of the card by the debtor was fraudulent.
Just claiming that the debt was incurred by fraud is not enough to except the debt from discharge: the creditor must present facts that prove fraud at trial.
Factors suggesting fraud
To decide whether a credit card charge was incurred by fraud, judges sometimes use a checklist of factors that suggest fraud, since there is seldom explicit evidence of dishonesty.
Those factors which the court weighs in making its decision are :
- the length of time between the charges and the bankruptcy filing;
- whether or not an attorney had been consulted concerning the filing of bankruptcy before the charges were made;
- the number of charges made;
- the amount of the charges;
- the financial condition of the debtor at the time the charges were made;
- whether the charges were above the credit limit of the account;
- whether the debtor made multiple charges on the same day;
- whether or not the debtor was employed;
- the debtor's prospects,
- whether there was a sudden change in the debtor's buying habits; and
- whether the purchases made were luxuries or necessities. See In re Dougherty, 84 B.R. at 657.
The factors used vary from circuit to circuit and the exact standard (if there can be said to be an "exact standard") differs depending on where the bankruptcy is filed.
If these issues are pertinent to your situation, get good bankruptcy advice from an attorney.