My name is Ron Drescher, I’m an attorney practicing
bankruptcy and creditor’s rights in Maryland, Delaware, Pennsylvania, and Virginia and today
I want to answer the question should I use my debit card right before I file bankruptcy
to pay for necessary expenses. Well that’s an interesting question. It’s a little bit
unsettled, but it’s getting more settled all the time and I would say the better answer
is yes you can do that. Because under Federal Electronic Payment laws the payment on a debit
card is considered an immediate cash transaction that the creditor can rely upon even though
the transaction maybe not settled until a day or two after you actually swipe the card.
Under federal law it’s the swiping of the card that constitutes a transfer, so that
the vendors and merchants are protected in the event that something goes wrong with the
debit card later on. This is important because under federal bankruptcy law a transfer typically
occurs when funds leave the debtor’s bank account. If that happens post bankruptcy the
trustee can grab that money because it was property of the bankruptcy estate as of the
time you filed the case, so that’s why writing a check is a little different because a writing
a check the transfer doesn’t occur until the check clears the bank, but a debit card is
different it’s an electronic transfer. It’s protected by a different federal statute and
you should be safe if you use a debit card immediately before bankruptcy. My name is
Ron Drescher; I’m an attorney practicing bankruptcy and creditor’s rights. If you have a question
about whether you can use a debit card right before bankruptcy please pick up the phone
and call me. I would love to hear from you.