QUESTION
Is it legal to obtain a loan and then declare bankruptcy soon after?
Asked on Jan 12th, 2012 on Bankruptcy - Georgia
More details to this question:
I'm interested in filing for bankruptcy due to high debt. Would it be legal to get into more debt by requesting a loan and then filing for bankruptcy? Or will it be looked down upon because of purposeful intentions?
9 ANSWERS
Bankruptcy Attorney serving Concord, CA
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William Rubendall Attorney at Law
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Debts incurred on the eve of bankruptcy are presumptively fraudulent and nondischargeable.
Answered on Jan 30th, 2012 at 12:36 PM
Bankruptcy Attorney serving Hampton, VA
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Haven Law Group, P.C.
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That is highly discouraged. In fact, any debt that is incurred within 90 days can be challenged in court by the creditor. As a practical matter, smaller (less than $500) charges usually are not challenged.
Answered on Jan 27th, 2012 at 11:51 AM
Chapter 13 Bankruptcy Attorney serving Bloomington, MN
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Gregory J. Wald
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It depends on the situation. If you take out a car loan with the intention of continuing payments and keeping the vehicle, its not a problem. Just keep making the payments after the bankruptcy or in some cases reaffirm and formally agree to repay the debt. But, if you borrow money with the intention of not paying it, that is fraud. Fraudulently incurred debts are not dischargeable in bankruptcy. In other words, you can't eliminate them.
Answered on Jan 26th, 2012 at 6:16 PM
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That is considered fraud and you should not do it.
Answered on Jan 26th, 2012 at 6:07 PM
Litigation Attorney serving Pearl River, NY
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Law Office of Bijal Jani
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Securing a loan and then filing bankruptcy soon thereafter could really land you in some deeper problems because the creditor(s) may be able to effectively claim against you that you intentionally and purposely engaged in actions that would be considered to be misrepresenting your intentions to repay your financial obligations. These claims may even result in your bankruptcy filing being rejected by the Court. That being said, there are options available to help you resolve your debt situation, and you should consult with an experienced attorney who can discuss with you the specific debts and the best options for you rather then just taking out another loan and increasing your financial crisis.
Answered on Jan 26th, 2012 at 4:18 PM
Business Bankruptcy Attorney serving Raleigh, NC
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J.M. Cook, P.A.
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The lender could and would move for the debt to be nondischargeable. Also, the trustee could file an objection to your discharge all together. This is simply an awful idea.
Answered on Jan 26th, 2012 at 3:58 PM
Criminal Defense Attorney serving Summit, NJ
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Stephen P. Dempsey Counselor at Law
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I would advise you not to obtain any loans or incur debts while intending to file bankruptcy.
Answered on Jan 26th, 2012 at 3:58 PM
Glen Edward Ashman
You're talking about fraud. That's ground to not only deny a discharge but if done deliberately could even involve prison.
Answered on Jan 26th, 2012 at 3:57 PM
Bankruptcy Chapter 11 Attorney serving Dacula, GA
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Chronister Law Firm, LLC
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If the trustee assigned to your case determines that you created this debt with the intent to discharge it in bankruptcy, then this debt could be excepted from discharge. The creditor may also object to the discharge of the debt if the debt was created within the past 12 months; the shorter the time between the date you file for bankruptcy and the date the debt was created will dictate as to how the bankruptcy court may rule in regards to the dischargeability of the debt. If you file a bankruptcy pro se, just be aware of the repercussions for falsifying any document within your bankruptcy petition.
Answered on Jan 26th, 2012 at 3:55 PM