Filing Bankruptcy? Stop Using Credit Cards

stop using credit cards during bankruptcy

We have spent a lot of time discussing whether you should file for bankruptcy. You and your spouse have gone home and talked about it at length and have come to the same conclusion that I did: there is no way you can put food on the table for your family, pay the mortgage, the car payment, utilities, insurances, and the other things you need to do to survive and still pay the credit cards.

But should you stop using credit cards? And if so, when should you stop?

With very few exceptions, the answer I will give you is “Yes, stop using the cards immediately.”

I tell this to my potential clients as they are leaving my office, even if they have not made a final decision just yet. Why do I do this?

Why Should You Stop Using Credit Cards?

First, there are some legal reasons, as running up your credit cards shortly before you file for bankruptcy could subject you to any number of legal issues. Among those are:

(1) The creditor whose card you used can challenge your ability to have their debt discharged (the reason to file for bankruptcy usually is to get this discharge) by bringing legal proceedings with the Bankruptcy Court;

(2) The creditor whose card you used could challenge your ability to get a discharge from any of the debts on your bankruptcy; in other words, a challenge to the bankruptcy itself;

(3) Other parties, such as the United States Trustee’s Office, the Interim Trustee appointed by the Court to your case, or even the judge herself or himself can challenge your ability to get a discharge because of your spending just before you filed for bankruptcy.

These are some of the significant actions that would be obstacles to your entire reason for filing the bankruptcy petition, and that’s to get rid of your debts. If these challenges find you in a trial facing the Judge in the Bankruptcy Court, it can also cost you a lot of additional money.

Then there is the primary reason I tell people not to run up their charges prior to filing for relief under the Bankruptcy Code and that is, I believe it is ethically wrong to do so. Other than very special circumstances, such as medical emergencies, I will tell you this in no uncertain terms.

Virtually all of my clients understand this. They get it. They already feel badly enough for not being able to make the payments. They don’t want to compound things by purchasing things that they cannot afford knowing that they will be using the good laws of our country to help give them relief. If you are considering bankruptcy and have a specific situation that you would like to ask about, contact Steidl & Steinberg and we will do our best to give you good advice on this sensitive issue.

We’re Big in Experience, Not Size

steidl and steinberg bankruptcy law firm experience


I hear the criticisms of large bankruptcy firms.

“I will probably be just a number.”

“How could a firm that big take care of little ol’ me?”

“I think I might get lost in a firm that big.”

We are Family

What really surprises people about Steidl and Steinberg are two things. First, we are not a big firm. There are six attorneys here, that’s all. All of the attorneys have been here for quite a while, and there is a family feeling here that you just don’t get in most places.

Second, though we are a very small firm, we have represented tens of thousands of clients. How is that possible?

It’s because we have been doing bankruptcy work since 1980. People think we are a large firm because they see our advertising, and surely, that must mean that we are really big.

I find that humorous. If you were in our office for just a few minutes, you would see how much like a family we are. There are discussions, lunches, disagreements, talk about the day’s sports events and politics or rushing to get to the fresh-hot pretzels or to make the morning coffee.

Yes, we also meet with clients all day in an informal yet dignified setting.

With us, Being Big Means Being Experienced

There are advantages to the perception of bigness as, in most cases, we have the experience to know what works and what does not.

I am aghast sometimes when I am in Bankruptcy Court and I see the mistakes made by less-experienced attorneys. I see other attorneys’ clients lose property that they should have kept because the attorney just didn’t understand what to do, or filed the case too early or too late, or didn’t read the law carefully, or didn’t know how the trustees and judges looked at that particular type of case.

Please understand, most of the attorneys who we see everyday are very good at what they do. But at the same time, so are we, and because of our wealth of experience, we get a chance to bounce things off of each other when confronted with certain situations that come up in Bankruptcy Court. We will go to the other attorneys in the office and ask: “Have you seen this? How did the judge look at this? What was the result?:

By having all of us to look at your situation, we increase your chance of having an excellent result.

When we tell you we are really a small firm, don’t laugh. We are. But when we tell you that you will benefit from the experience of six attorneys, believe that also, because you will. And yes, we really want to know how your puppy made it through the vet’s visit, or how your mom is feeling. Because it really is a family here.

Worry About Getting Better, Not Medical Bills

worry about getting better, not medical bills


My clients just left, and they have been going through so much pain and suffering over the last several years leading to a plethora of medical bills and prescription bills.

I have to admit I hadn’t seen the sheer number of medical bills like they have in quite a while. While it looks like these bills will total less than $25,000, on their fixed income they simply cannot afford to pay them.

My clients are sophisticated about bankruptcy, having done their reading before they came to see me. They already knew what some of my other clients do not: medical bills are absolutely dischargeable in bankruptcy.

Bankruptcy Gets Rid of Medical Bills

Some of our clients come into the office at Steidl and Steinberg and we talk about their general financial situation. I go over their income and their typical monthly household expenses, and we talk about their assets: house, cars, other areas of inquiry so that I can assure them that they will be able to keep everything they own if a bankruptcy filing is needed.

Then we get to the bills. We go over the charge cards and personal loans and talk about student loans and we do have some creative ways for dealing with excessive student loan payments.

Every so often one of our clients asks, “can you do anything with the medical bills?” The answer is, yes. Medical bills are just like other unsecured debts like charge cards and unsecured personal loans in that they can be discharged in a typical Chapter 7 or paid a percentage of their amount in a typical Chapter 13.

That means you can worry about getting back to good health and let us worry about the bills.

Do you have large medical bills? Contact us today and schedule your free consultation and learn more about your options for dealing with your debt.

Using a Charge Card for Groceries is a Sign of Trouble

credit card for groceries bankruptcy


The charge card bills and loans come in, and you pay them dutifully. Then you need tires, so you place them on your charge. Next month, the charge card bills and loans come in. You pay them. And then it is time to get the kids some clothes, so you charge them. Thirty more days pass, and the charge card bills and loans come in. And of course, you pay them. But now there is almost nothing left over, you need groceries, so you go shop and pay for the groceries with your charge card. Does this sound like your situation?

Bells and whistles should be sounding in your head. If you need to pay for the above things by a charge card because you have no money left over in your budget, you should consider contacting us.

If you are paying for groceries with a credit card, you are not alone.

I had some clients visit me recently for a free consultation. They were both working, not making as much money as they would like, but still a decent amount. With kids, a couple of pets, and a house in a nice neighborhood, it sounded like an ideal setting.

But they are the living the life in the paragraphs that I described above. The bills come it, they pay them. Then they need something so they place it on the charge. Then the bills come in, and they pay them. They need something else and it goes on the charge. And so on. And so on. But the bills keep creeping up. They started out at just a few thousand, and then they reached $10,000. No matter; they could afford the monthly payments. And then they were $20,000. And they are still going up.

Now the monthly payments are much more than they ever anticipated, and they are scrambling. The charge cards are reaching their upper limits and they will not be able to charge their way out of the jams anymore.

That’s where we come in.

Bankruptcy Could be the Solution

We will look at possible solutions, including different forms of bankruptcy. Chapter 7 would enable them to get rid of the charge cards and loans. Chapter 13 would enable them to get into a payment plan that’s much less than they are paying now. In this case, Chapter 7 was appropriate. The clients were able to keep everything, even their house and cars.

They have now shaved $800.00 per month off their budget and are able to go to the grocery store and actually pay for their items without a charge card. They are able to save a bit of money so that the next car repair will not need to be paid out with a credit card. And I have shown them the way to build up that credit so, if there is an emergency in the future, they will be assured that they can get through that also.

Let’s see if we can help you. Instead of putting those groceries on your charge card, consider calling us.

We will give you food for thought.

Filing Bankruptcy? Stop Paying Credit Cards

credit card bills during bankruptcy


I love Western Pennsylvania. We have an honest, hard­-working ethic that just will not go away. And we want to pay our bills. So when I tell most of our clients who are about to file for bankruptcy protection that they should stop paying their credit cards, they look at me in horror. “I can’t do that­­!” they say, “I have always paid my bills.”

Don’t Throw Money Away

I get it. I always pay my bills too. The difference is I have determined that you do not have enough money to pay for your food, clothing, rent or mortgage, utilities, car payment, gasoline, insurance, and other necessary expenses and still make payments on your credit cards. If that is the case, and if I have recommended that you file bankruptcy, then all you are doing by paying these bills is delaying the time that it takes to file. You are also throwing money away that can be used to catch up on a needed car repair, or buy food that the household needs, or pay for the filing of the bankruptcy.

There is a fear that creditors can swoop right in and take things from you, but those fears are generally unfounded, and we can tell you the situations where that might happen. In those few situations, we may tell you to keep on paying on the cards. Generally, creditors cannot come in and take anything. They would have to sue you, win, and you would have to decide not to appeal the decision before they can come in and take anything, and that process can take months, and often years, to happen.

If we tell you to stop paying the cards we mean it. Stop paying the credit cards.

Wondering if bankruptcy is the right option for you? Contact us today to schedule your free consultation.