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Is your spending limited during bankruptcy?

On Behalf of | Jul 18, 2022 | Bankruptcy

You’re filing for Chapter 7 bankruptcy, but it’s not as if you’re going to be through the process in a single day. It can take months, and each case is unique. Some are more complex than others. Either way, you’re going to be in this Chapter 7 process for a little while.

During that time, you’re still going to have to spend money. Since you’re filing for bankruptcy, are there any limits on what you can spend? Should you always avoid credit cards, for example, or is anything you need to worry about?

Your standard spending habits are acceptable

The one real thing to worry about is making it look like you’re trying to commit bankruptcy fraud. This sometimes happens when people decide that they’re going to declare bankruptcy and then realize that all their debts are going to be eliminated. Since they still have a few months, they think that it only makes financial sense to get those debts as high as possible. After all, it’s all going to be wiped out.

However, doing this is a form of fraud and it is illegal. So you’re not allowed to spend recklessly or above your normal limits. 

That being said, your normal spending habits are fine. The bankruptcy court is not going to penalize you for continuing to use your credit card to put food on the table for your family or to pay the utilities and keep the lights on. You can still spend money, but you just need to be careful that all of your expenses are reasonable and justified.

As you work your way through bankruptcy, take the time to carefully look into all the things you want to avoid and the legal steps that you should take.


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The Law Office of Kim Covington is a debt relief agency, and I have helped families, individuals and small businesses, file for bankruptcy relief under the U.S. Bankruptcy Code, for over 23 years.