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Has Your Bankruptcy Client Used Their Credit Cards Within the Past 90 Days?

29th March 2010
By VictoriaRing in Bankruptcy Law
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The average consumer who has never filed bankruptcy rarely understands that charging their credit cards to the maximum limit of their credit, then filing bankruptcy, is fraud. Instead, many people believe it is their right to buy all the assets they need now because it will help them through the bad times when they file bankruptcy.

But regardless of the logic the client may use to commit fraud, the fact remains that it is unfair for the creditors who extended them credit within the past 90 days. Besides, if the client could discharge these debts in bankruptcy, it would provide the client with an unfair advantage because the creditors were not aware of the upcoming bankruptcy filing when they granted them credit.

I am a paralegal with a sincere heart for the debtor; but fair is fair. I believe we should all work hard to keep the law fair and balanced. This is one way of doing it, making sure the clients have not used their credit cards within the past 90 days and being able to prove it to the trustee.

Because this is such an important issue in bankruptcy, in order to drive the point home even further; how would you feel if you granted a friend $5,000 in credit to buy things from your store? All you ask your friend to do is pay you back; to which she agreed. Your friend is considering filing bankruptcy after charging $1,000 at your store; which your friend listed on Schedule F of her bankruptcy petition. However, one week before your friend files bankruptcy, she comes into your store and purchases $4,000 worth of products. Your friend knows at the time of her purchase that she will not be able to pay this money back. This is the reason why this act is considered FRAUD. Your friend is fully aware of committing the fraud before the act is committed. This is known as premeditated behavior and always carries a much heavier penalty in all areas of law.

Why am I telling you all this? Because it will help you to take this issue very seriously. When you are conducting a bankruptcy client intake interview and you ask a client the question: "Have you used your credit cards within the past 90 days?" do not simply bypass this question and assume the clients are being truthful when they answer no.

During intake interviews where I have been training attorneys and paralegals, I have often found that when the client answers [no] to this question, it was nonchalantly passed by and forgotten. Unless they have been trained, many law firm staff as well as attorneys do not know the importance of this question and the repressions it can cause. And because of their lack of knowledge, many bankruptcy petitions have gone to Adversary Proceedings simply because the clients used their credit cards within the past 90 days and the credit card company provided verification when they filed an Objection.

Therefore, the article you are reading now could potentially save you thousands of hours in lost time simply by placing an emphasis on this particular issue during client intake interviews. And there is no better time to obtain this information than during a face-to-face interview with the client.

Suggestions for Face-to-Face Client Intakes

Every time you ask a question, look straight into the client(s) eyes and wait for a response. Do not try to rush them into a response. Do not try to look annoyed or coach them to provide an answer. Instead, WAIT for them to answer. Have a piece of paper beside the file where you pick up a pen and write notes during the interview. This piece of paper can also serve as a place to write down questions the client(s) may have for the attorney if the interview is conducted by a non-attorney.

Or, if you are the attorney doing the intake interview, write down notes about the questions you answered that the client(s) asked. As soon as possible after the intake interview, the person who did the Initial Intake Form interview should type out their notes and save them as a Word or PDF file which is placed inside the client(s) electronic file within the law firm. This document is an extra added piece of insurance to verify information the client(s) provided.

You will find in consumer bankruptcy that client(s) have a tendency to change their stories quite often. Normally this is only caused from being nervous and emotionally drained. Give your client(s) a break and spend time helping them to feel more relaxed. Even the smallest gesture of kindness goes a long way and the client(s) will refer business to you. Therefore, train all members of your staff to treat client(s) like celebrities and you will have a thriving law practice, guaranteed.

Suggestions for Client Intakes Conducted by Telephone

Another way to ask client(s) if they have used their credit cards within the past ninety (90) days and obtain a more truthful answer when you are not face-to-face is: "If you have used your credit cards within the last 3 months we will need to document how you spent the money in order to protect you. What credit cards have you used and what did you spend the money on?" By asking the question in this manner you are asking it in a way that is more positive toward promoting a [yes] response versus an automatic [no] when you ask: "Have you used your credit cards to make purchases within the past 90 days?"

Where Should You Place This Information on Schedule F

I have already trained my students to place the LAST DATE the credit card was used on the DATE line of Schedule F. For example:

Date: 2005, Last date used: 10/2009

When you print out Schedule F you will find that placing the LAST DATE the credit card was used in this location allows the trustee to scan down the list and easily locate the information he or she needs. If there is an Objection from a creditor, the trustee will view the information provided on Schedule F and probably request verification from the attorney.


It is my desire that the articles I write help to provide Chapter 7 and Chapter 13 bankruptcy attorneys with information they need to positively affect their law firm. If I can help your particular law firm with training and support in the area of Chapter 7 and Chapter 13 bankruptcy, simply Google my name: VICTORIA RING or connect with me on LinkedIn.


Victoria Ring is a Certified Paralegal and Debtor Bankruptcy Specialist. She currently serves as the CEO for Colorado Bankruptcy Training as well as the senior adviser for the 713 family of companies. Additional information can be obtained at

This article is free for republishing
About the Author
Occupation: Certified Paralegal
Victoria Ring is the founder of the virtual bankruptcy assistant industry. Currently she provides training and support to Chapter 7 and Chapter 13 bankruptcy attorneys and their law firm personnel.
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