If my credit cards are maxed out and I file bankruptcy when is it fraud?

Filing for bankruptcy after your credit cards have been maxed is not a problem if you reached your spending limit on your credit cards prior to establishing your intention to file for bankruptcy.  For instance, if you reached your credit card limit a year ago and you struggle to make minimum payments each month, the bankruptcy court will not deem that behavior fraudulent.  You may be required to return all purchases you made on the credit card.  However, if you max credit card, bankruptcy filing shortly thereafter, the bankruptcy court may determine that your actions are fraudulent.  It is fraud to purchase something with no intention of repaying the debt, and instead filing for bankruptcy.  If your actions are determined to be fraudulent, you can face penalties and may have your bankruptcy case dismissed, or your credit cards may not be dischargeable in your bankruptcy.   

In addition, transferring money or buying gifts for friends and family shortly before filing for bankruptcy may also be fraudulent.  Such gifts to friends and family, called a fraudulent transfer, will be seized by the bankruptcy court even if the recipient of the gift had no knowledge of your intentions.  You may face jail time for a fraudulent transfer and you run the risk of having your bankruptcy case dismissed.