Using Your Credit Cards Prior To Personal Bankruptcy or Proposal

Understanding the Implications of Maxing Out Credit Cards Before Declaring Personal Bankruptcy or Proposal

Personal bankruptcy or consumer proposal are significant financial decisions that can greatly alter one’s financial future. One major concern that arises when one is contemplating these decisions is the handling of credit card debts. Many are intrigued by the question, “What would be the consequences if I maxed out all my credit cards before filing for personal bankruptcy or a consumer proposal?”.

The Temptation to Borrow and the Potential Legal Implications

The idea of borrowing money with the intent of not repaying it might sound tempting to some. However, such actions could potentially be deemed as fraudulent activities, which are punishable by law. Even though it’s less likely that the creditors would resort to criminal charges, they might decide to take other actions based on their investigations into your credit card transactions for the year leading up to your personal bankruptcy or consumer proposal.


“Borrowing money with the intention of not repaying it can be considered as fraudulent activities, a criminal offense.”


Impact on Debt Discharge in Personal Bankruptcy or Consumer Proposal

It’s important to note that debts resulting from fraudulent activities are not discharged in personal bankruptcy or debt settlement through a consumer proposal. This means that such debts remain and the creditor may choose to pursue recovery of the debt even after you have filed for personal bankruptcy or a consumer proposal.

Effect on Consumer Proposal and Personal Bankruptcy Proceedings

If you have recently ramped up your credit card usage and then file a consumer proposal, it’s probable that the creditor will not vote in favor of your proposal. This could increase the chances that personal bankruptcy becomes necessary to resolve your debts.

In the case of filing personal bankruptcy, if you had run-up a debt before the bankruptcy, this behavior could be used to oppose your discharge from bankruptcy. A Court hearing will be held to review your actions.

Depending on the severity of your conduct, the Court may demand repayment of some or all of your debts as a condition for your discharge from bankruptcy. Further, the Court could also impose stricter penalties for your conduct prior to your bankruptcy.

Recommended Course of Action

If you’re struggling with paying off your debts, it’s advisable to stop using your credit cards and consult a Licensed Insolvency Trustee to review your situation and discuss possible options.

Choose the Right Licensed Insolvency Trustee

Choosing the right Licensed Insolvency Trustee is crucial for your financial recovery. They should be experienced, capable of handling your unique financial situation, and able to provide personalized advice based on your specific circumstances.


  • They should not follow a one-size-fits-all approach.
  • They should be responsive and capable of resolving issues promptly.
  • They should be able to provide a comprehensive review of your debt solution options.
  • They should be capable of assisting people with overwhelming debt problems to achieve a fresh financial start.


After filing a consumer proposal or personal bankruptcy, the Licensed Insolvency Trustee will deal directly with your creditors on your behalf. Your unsecured creditors are obliged to stop contacting you or continuing legal proceedings against you.


Taking on more debt before filing for personal bankruptcy or consumer proposal could lead to serious consequences. Therefore, it’s crucial to understand the implications and consult with a Licensed Insolvency Trustee if you find yourself struggling with debt. Remember, it’s always better to seek professional help sooner rather than later.

Reach Out For a Free Consultation

Free consultations are available to review your financial situation and explore practical debt resolution options. You can discuss your situation over the phone, a video chat, or in-person at various locations.

Remember, understanding the implications of using your credit cards prior to personal bankruptcy or a consumer proposal is the first step towards making informed decisions about your financial future.

Find Your Personal Debt Relief Solution

Licensed Insolvency Trustees are here to help. Get a free assessment of your options.

Discuss options to get out of debt with a trained & licensed debt relief professional.