When preparing to file for bankruptcy, many are tempted to pay back family members prior to filing. This temptation is just that – a temptation. Do not attempt to pay anyone back prior to filing. When filing for bankruptcy, you can’t decide to pay off one or two debts when you’re including the rest in your bankruptcy.
Another, more excessive form of this same temptation is when individuals who are considering filing begin to wonder if there’s any harm in taking cash advances on credit cards they’ll be including in their bankruptcy in order to pay back another creditor that they “don’t want” to include in their bankruptcy filing.
The problem with this is that doing so would be bankruptcy fraud. It is not only inappropriate to take a cash advance to pay back a personal loan before you file for bankruptcy, it is completely illegal. Calling it bankruptcy fraud is not an exaggeration. Bankruptcy is a legal procedure designed for those who intend to pay their bills, but are unable to do so. Most of those who file for bankruptcy have undergone extenuating circumstances: extensive periods of unemployment, divorce, medical issues, etc.
Bankruptcy is a method of starting over without debt overburdening you, but it is not meant to provide you with the opportunity to transfer family or personal debt to big name credit card companies and then file against them to clear the debt without financially injuring the creditor you know personally. This is a complete corruption of the bankruptcy system.
Ignoring the ethical complications of paying off personal loans by taking advances on credit cards that you’ll be including in a coming bankruptcy, you’ll still run into the legal problems created when your creditors review your account upon receipt of bankruptcy notification. At that point, they will challenge your request for bankruptcy relief as a result of what is, in effect, bankruptcy fraud.
If you have concerns regarding bankruptcy fraud get in touch with the experts at Westgate Law immediately.