When you are scraped for cash, getting a cash advance from your credit cards may sound tempting. Though possible, this cash advance will cause complications if you were to file for bankruptcy in the future.
What Happens to Credit Card Debt in a Bankruptcy?
Generally, credit card debts are discharged in bankruptcy proceedings. In other words, the debtor does not need to pay back the money he owes to the credit card company. Even so, there are some exceptions to this generality in which the credit card company may file an adversary proceeding to ask the bankruptcy court to make the debt non-dischargeable.
Presumption of Non-Dischargeable Debts
For any credit card cash advances that is over $925 and within 70 days of filing for bankruptcy, this debt is presumed to be non-dischargeable. Thus, if the credit card company files an adversary proceeding against you, you must prove that you did not have the intent to defraud the credit card company when you took out the cash advance. To do so successfully, you must prove that when you took out the money, you intended to pay the credit card company back and that it was not a method to get the cash advance discharged during your bankruptcy proceeding.
Other Non-Dischargeable Credit Card Debts
Even if you got a cash advance that is less than $925, your cash advance may be non-dischargeable. The credit card company would have to file an adversary complaint, in which they would have to prove that you intended to defraud them. This is different from the credit card company having a presumption because the burden of proof is now on the credit card company.
Consulting an Attorney
If an adversary hearing has been filed, you should consult a bankruptcy lawyer. Bankruptcy is a very complicated process. Moreover, a lawyer will advocate on your behalf during the hearing, and will strategize with you.