Taking on New Debt Before Bankruptcy Filing in Florida


Young woman calculating expenses and money assets | Financial Freedom Advocates

Taking on New Debt Before Bankruptcy Filing in Florida

There are numerous issues that should be weighted in advance when filing for bankruptcy in Florida. Apart from choosing between Chapter 7 or Chapter 13, one needs to decide about managing mounting debts, using credit cards, and taking new loans.

In this situation, the safest way is to stop creating new debts at least 90 days before the planned date of filing to avoid fraud accusations. But life doesn’t stop even before bankruptcy, and there will be bills to be paid and expenses to be covered. Here is a short synopsis of dos and don’ts when taking on new debts shortly before the bankruptcy filing.

When New Debts Might Be Dischargeable

Most often, those who intend to file for bankruptcy continue using their credit cards. Although the safest approach is to switch to debit cards, there are situations when limited use of the credit card can be considered a safe practice.

In such case, credit card use should be limited to paying for living essentials such as gas for the car, groceries, medical supplies and other necessities to sustain a living. As the credit card is wiped out after bankruptcy, the creditor will object to discharging debts when provided the slightest chance so that anything beyond the list of absolute necessities might be considered as non-dischargeable.

Which New Debts Should Be Avoided When Filing for Bankruptcy

The decision to file for bankruptcy in Florida is never to be taken lightly. In any situation, one should avoid the temptation to make unnecessary purchases and go on a spending spree in hopes that newly created debts would be wiped out as a result of the bankruptcy proceeding. Such tactics constitute fraud and, as a result, all incurred expenses will have to be paid out.

By the same token, any expenditure on luxury goods and services, including electronics, jewelry, cosmetics, as well as dinners out, plane tickets, and similar spending should be limited. The law sets the limit of $650 for any such expenditure during the 90-day limit before the bankruptcy filing.

Another type of debt that could raise issues when filing for bankruptcy is cash advances. While this might be viewed as a quick way to cover expenses, cash advances above $1,000 over the 70-day period before bankruptcy filing would be considered non-dischargeable.

Finally, taking out loans for bigger purchases, such as buying a car, is safer to be pushed until after the bankruptcy. However, sometimes it is just not possible for practical reasons. In this situation, when filing under Chapter 7, the trustee would sell the car, return the exempt amount and use the balance to pay the creditors. As the vehicle bankruptcy exemption in Florida is limited to $1,000 in car equity or $2,000 for couples filing a joint bankruptcy petition, anything paid in excess of this amount would be lost. Meanwhile, filing under Chapter 13 would allow keeping the car in possession subject to paying out the nonexempt portion of the car according to the repayment plan.


While Florida provides one of the most generous bankruptcy exemptions, those who intend to file for bankruptcy should follow a careful approach when considering mounting debts. While some credit card expenditures to pay for essentials can be discharged, creating other debts can lead to risky situations. It is recommended to consult with an experienced bankruptcy attorney to review your individual case and define the secure path to managing your debts while preparing for bankruptcy filing.

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