The United States Bankruptcy Code treats balance transfers the same as credit card purchases.   Our experience has been that a balance transfer from one credit card account to another (presumably for the purpose of getting a lower interest rate) within 90 days of filing will raise a red flag.  Similarly, if your statements show a pattern of balance transfers within approximately one year of filing and the total balance on the new card account totals around $25,000 or more, there is an increased risk of an objection.

Generally the objections that you are likely to face are objections to the dischargeability of a debt.  In other words, the new credit card lender will argue that your debt to it should not be discharged in your Chapter 7 because at the time you made the balance transfer you knew or should have known that you were not going to have the money to pay the balance and/or that you knew you were going to file bankruptcy but made the transfers anyway.

Whenever possible, we recommend that our clients who have made balance transfers wait for several months before filing, and that they make regular payments during the waiting period.

If waiting is not possible and we have to file Chapter 7 sooner rather than later, you may have to settle a dischargeability claim with your balance transfer creditor.  Often, however, the settlement will be for less than the full amount, payable over time and at little or no interest.



Jonathan Ginsberg represents honest, hardworking men and women in the Atlanta area who need bankruptcy protection. Call him at 770-393-4985 for a confidential discussion.

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