When To Stop Using Credit Cards Before Filing Chapter 7

Key Takeaways

This article covers the most important things to keep in mind about using credit cards before filing for Chapter 7 bankruptcy. Here’s a quick summary overview:

🛑 It’s best to stop using your credit cards as soon as you start seriously considering bankruptcy.

💍 Avoid making luxury purchases within 90 days of filing or taking cash advances within 70 days of filing — these may not be discharged.

🍞 Stick to essentials like food or medicine if you absolutely need to use credit, but try to avoid new charges if possible.

💸 Once you’ve decided to file, many people stop paying their credit card bills so they can afford necessities instead.

🙋 Credit card debt is usually wiped out in Chapter 7, but recent questionable charges can be challenged by creditors.

✋ After you file, an automatic stay stops all collection efforts, including calls, letters, and lawsuits.

Can You Use Credit Cards Before Filing Chapter 7?

Yes, but most professionals advise only using them for essential living expenses or to stop using them altogether if that’s possible for you.

If you can’t get by before bankruptcy without using your cards, it’s best to stick only to essentials like food, gas, or medication so you don’t face issues later during your case.

When Should You Stop Using Credit Cards Before Bankruptcy?

If you're considering bankruptcy, it’s best to stop using your credit cards as soon as you start thinking seriously about filing. 

🚩Using credit cards right before filing can raise red flags with the court, especially for:

• Non-essential (luxury) charges over $725 made within 90 days of filing

• Cash advances over $1,000 taken within 70 days of filing

These kinds of charges may be seen as fraudulent and might not be discharged, meaning you’d still be responsible for paying them back.

That said, using your credit card recently doesn’t automatically mean you're in trouble. Bankruptcy is designed to help people who are doing their best in a tough situation. 

❗The most important thing is that you don’t make any charges with the intention of erasing those debts through bankruptcy.

Two Smart Tips if You Still Need To Use Credit Cards Before Bankruptcy

If you still need to rely on credit cards to get by and you’re planning to file bankruptcy soon, these two tips can help you avoid issues down the road:

1. Stick to essentials.

2. Avoid cash advances.

Stick to Essentials

A good rule of thumb is to stick to essential living expenses only and avoid charging anything that could be considered a luxury purchase. 

In other words, if a purchase isn’t something you absolutely need — like groceries, prescriptions, or bus fare — it may be better to hold off. 

Credit card charges that look unnecessary or excessive could raise concerns during your case.

Avoid Cash Advances

It’s also helpful to avoid taking cash advances, even for basic needs. These types of transactions often come with high interest rates and can be treated differently than regular purchases in a bankruptcy case. 

In some situations, cash advances are more likely to be challenged or excluded from discharge, especially if they were taken out close to your filing date.

What Happens if You Keep Using Credit Cards Too Close to Filing?

Using your credit cards right before filing for bankruptcy can cause problems. This is especially true if the charges seem unnecessary or were made when it was clear you couldn’t pay them back. In some cases, those debts might not be wiped out.

This is because creditors may take a closer look at your recent spending. If something stands out — like a big purchase or a cash advance — they may try to challenge it in court. 

👉 If you take on debt with the intention of having it discharged, the court may not allow you to get rid of it. It may even be seen as bankruptcy fraud. Luckily, this rarely happens because most filers are acting in good faith. Still, it’s good to understand the rules.

Creditors Can Challenge Certain Charges

If a creditor thinks you took on new debt knowing you wouldn’t repay it, they can ask the court to leave those charges out of your bankruptcy. If the court agrees, those debts won’t be discharged.

For example, if the creditor can show you charged more than $725 on luxury goods within 90 days of filing, those debts may be excluded from the bankruptcy discharge.

💡A bankruptcy discharge is the court order that wipes out qualifying debts so you’re no longer legally required to pay them.

The creditor doesn’t have to prove that you didn’t intend to pay it back or knew you were going to file bankruptcy — they just need to show the timing and amount.

This doesn’t happen in every case. Most people who file in good faith and stick to essential spending don’t run into this problem. But if you’re worried about recent credit card use, it may help to set up a free consultation with a bankruptcy attorney so you know where you stand.

The Bankruptcy Trustee Will Review Recent Financial Activity

🔎 Before your debts are discharged in Chapter 7, a court-appointed bankruptcy trustee reviews your recent financial activity. Their job is to make sure you haven’t misused credit or favored certain creditors over others. 

This review often happens around the first meeting of creditors, also known as the 341 meeting. During this meeting, you’ll answer questions about your income, assets, and debts under oath.

Trustees look for signs of credit abuse or fraudulent intent as mentioned above. This may include unusual credit card charges, luxury item purchases, or cash advances made shortly before you filed. 

They also check for preferential payments.

💡Preferential payments happen when someone pays back a friend, family member, or certain creditor in the months leading up to bankruptcy. 

If something looks off, the trustee can object to wiping out certain debts or even try to recover money by seizing certain assets to make things fair for all creditorsWhile most cases don’t raise these issues, it’s still a good reason to avoid new credit card charges once you know you’re planning to file.

Does Chapter 7 Bankruptcy Get Rid of Credit Card Debt?

Usually, yes. 

👉 Credit card debt is unsecured debt. This means it’s not tied to any specific property, like a car loan or mortgage. This type of debt is usually eligible for discharge, meaning it can be wiped out, giving you a fresh start.

When you file for Chapter 7, you list all your credit card balances, along with other debts, in your bankruptcy paperwork. 

✋ Once you file your case, the court issues an automatic stay, which immediately stops creditors from trying to collect on those debts. This means credit card companies can’t call, send letters, or take legal action to collect what you owe.

If your bankruptcy goes smoothly and the court grants your discharge, most or all of your credit card debt will be erased.

When Can You Stop Paying Your Credit Card Bills?

If you’ve decided that bankruptcy is the best way to deal with your debt, it’s okay to stop making minimum credit card payments. This can free up money for essentials like groceries, rent, or gas. 

Yes, missing payments will hurt your credit score, but you’ll be able to rebuild your credit after your bankruptcy case is complete.

It’s far more important to prioritize necessities like food, shelter, and transportation than to stress about your credit score. Missing a few payments before filing for bankruptcy won’t stop you from getting a fresh start. 

Discharging your debts through bankruptcy is often a much better financial solution than continuing to struggle to keep up with payments.

How Will Missed Payments and Bankruptcy Affect My Credit?

Both missed payments and bankruptcy will show up on your credit report and decrease your credit score. However, once your bankruptcy is complete, your debt-to-income ratio will improve… and usually your credit score along with it. This is because bankruptcy wipes out many unsecured debts, like credit card balances.

Lenders may even see you as less risky after bankruptcy because you won’t be able to file for Chapter 7 bankruptcy again for eight years. While it may take time to rebuild your credit, many people find that it’s easier to move forward financially after their debts are discharged.

What Happens When I Stop Making Payments?

When you stop paying your credit card bills, your creditors will likely start trying to collect. You may get frequent phone calls and letters demanding payment. This can feel stressful, but it doesn’t last forever. As soon as you file your bankruptcy petition, something called the automatic stay goes into effect. This legal protection stops all collection efforts immediately, including phone calls, letters, and even lawsuits.

Tips To Avoid Using Credit Cards Before Bankruptcy

If you’re trying to stop using your credit cards before filing for bankruptcy, you’re not alone — and you do have options. 

Here are some tips to help you avoid using credit cards while still getting by before your bankruptcy:

• Turn to alternative financial support sources to help cover essential expenses like food, rent, or medical bills. This could include community assistance programs, local nonprofits, or family support if it’s available to you.

• Lower your costs or cut discretionary spending if you haven’t already. This is the first place many people turn to free up some cash. Avoiding non-essential purchases like takeout or subscriptions, at least in the short-term, can help you get by without relying on credit cards.

• Consider negotiating payment plans directly. If you’re facing big bills, like medical costs, or have past-due utilities, try negotiating a payment plan directly with the provider before turning to cash advances or credit cards. This can be especially helpful if you aren’t sure yet about filing Chapter 7.

These kinds of expense management strategies can help you get by without taking on more unsecured debt, which could cause problems in your bankruptcy case. Exploring a debt relief option like Chapter 7 can be a big step — and finding safe ways to meet your needs in the meantime can make the process smoother.

Let’s Summarize...

If you’re planning to file Chapter 7 bankruptcy, it’s best to stop using your credit cards at least 90 days before filing. This helps you avoid potential issues with your case. You can’t max out your credit cards right before filing and expect those debts to be wiped out. Bankruptcy is designed to help honest but struggling people get a fresh start. If you take on debt knowing you won’t repay it, the court may decide those charges aren’t eligible to be discharged.

If you aren’t sure which debt relief option is right for you, take our quick screener to see what you’re eligible for. If you want to file Chapter 7 and your case is simple, you may be eligible to use our free online filing tool. Upsolve has helped thousands of people discharge almost $700 million in debt through Chapter 7 bankruptcy.