For many Americans a cash advance, which can be in the form of a credit card cash advance or a payday loan, is a common occurrence. If you plan on filing for bankruptcy in the near future this move may be a big mistake. Whether you provide a post dated check to a payday advance company or you use your credit card at an ATM and take money out using a pin number this could possibly have an impact on your bankruptcy case. The timing of the advance and the chapter of the bankruptcy code that you file under will both determine whether or not the cash advance will impact the bankruptcy case.
Both the chapter of the bankruptcy code used and the timing of your filing are important. The timing is the most important element though. If you take out a cash advance and then file for bankruptcy protection within 90 days of receiving the advance it is very possible that this debt will not qualify for discharge and you could still owe it after your bankruptcy case is closed. In addition recent cash advances may be viewed as an attempt to commit bankruptcy fraud, especially if the amounts are large.
If you file for bankruptcy under chapter 13 of the bankruptcy code then you may be allowed to include this debt in the repayment plan that the court approves. Chapter 7 of the bankruptcy code eliminates the approved debts and no repayment plan is necessary. If you file a chapter 7 bankruptcy then the creditor that you owe the cash advance to may try and contest the debt being discharged. Many people rely on cash advances to meet day to day expenses, and just using these services is not a clear sign of the intent to commit bankruptcy fraud. Recent cash advances may be a reason for the court to scrutinize your petition and case very closely though.
In many cases a cash advance will be discharged during your bankruptcy case. This is true no matter which chapter of the bankruptcy code you file under. If you suspect that you may need to file for bankruptcy within the next 6 months then you should try to avoid taking out any cash advances if at all possible. These may not necessarily prevent you from getting the desired discharge but they can complicate your case and make it take longer or involve creditor objections.
If you are having financial difficulties then the best step is to talk with a bankruptcy lawyer who is also a debt specialist. This attorney can advise you on whether or not a cash advance will harm your case, and even if bankruptcy is the right option for you and your unique debt situation. Some bankruptcy lawyers only handle bankruptcy, and they will always advise filing a bankruptcy petition. A lawyer who is a debt specialist will go over all the available options that you have, and will determine whether a cash advance will hurt your case or not if you do decide to file.