Submitted by Jen Jones on Thu, 07/09/2009 - 1:23pm
But you must resist!
You've caught on to the fact that certain kinds of debts are "better than others." Knowledge is a good thing, but don't get confident that you'll be able to pull a fast one by trading off a non-dischargeable debt for a dischargeable one. The consequences simply aren't worth it. Here again is another great reason to count on an experienced bankruptcy attorney when filing your case; he will help you act strategically to maximize the benefits of bankruptcy while helping you avoid the pitfalls and mistakes.
Most loans are unsecured and will thus be discharged altogether in most Chapter 7 cases, and discharged after successful completion of the payment plan in a Chapter 13 bankruptcy. With this knowledge, some people get the bright idea to, for example, take out a new credit card, max out the cash advance, and use that to pay some non-dischargeable debt. They then file for bankruptcy hoping nobody will catch on. Huge no-no.
If you file for bankruptcy and the person who made that loan to you can prove that you were already contemplating the bankruptcy, he can petition the court to have the discharge denied on the basis of fraud. Even worse, he may be able to persuade the court to deny discharge altogether, not just for his debt but for all your debts. A Chapter 7 or 13 bankruptcy can be outright dismissed on bad faith grounds if the creditor can prove what you did.
To prove a fraud claim, the creditor will need to show that, at the time you took out the unsecured loan, you did not intend to pay it back, so obviously the court is going to consider things like the interval between the loan and your bankruptcy filing. This is a huge headache you don't want for your case.
Yet another reason you want to avoid one of these shady deals is that some of the debts you are trying to pay off may be priority debts, and if left unpaid, they could help you pass the means test. In other words, by paying down the priority debt with an unsecured line of credit, you might make yourself ineligible for a Chapter 7 altogether or make a Chapter 13 much more costly than it needs to be. Examples of priority debts include taxes, child support, alimony or personal injury claims arising from driving under the influence.
You might also want to keep in mind that the trustee can take back payments made to non-dischargeable unsecured creditors made within 90 days of the bankruptcy. So let's say you take out a cash advance, use the money to make a big payment on your non-dischargeable student loan, and then file for bankruptcy. If your trustee decides to take the payment back, you still owe the original creditor, PLUS now you owe a new guy you took out the cash advance with. What a waste!
Trickery looks inviting, but it can land you in big trouble. Play it safe andÂ stay away from anything that looks like fraud.
If you're in North Carolina and considering filing for bankruptcy, contact the Law Offices of John T. Orcutt today. With convenient offices in Raleigh, Durham, Fayetteville and Wilson, call +1-833-627-0115 to set up your free initial debt consultation.
Debts Hurt! Got debt? Need help? Get started below!
Serving All of North Carolina
Bankruptcy Attorneys Raleigh NC (North)
6616 Six Forks Rd #203 Raleigh, NC 27615 North Carolina
Tel: (919) 847-9750
Bankruptcy Attorney Fayetteville NC
2711 Breezewood Ave Fayetteville, NC 28303 North Carolina
Tel: (910) 323-2972
Bankruptcy Attorney Durham NC
1738 Hillandale Rd Suite D Durham, NC 27705 North Carolina
Tel: (919) 286-1695
Bankruptcy Attorneys Wilson NC
2215 Nash St N Wilson, NC 27896 North Carolina
Tel: (252) 234-9194
Bankruptcy Attorneys Greensboro NC
2100 W Cornwallis Dr. STE O Greensboro, NC 27408 North Carolina
Tel: (336) 542-5993
Bankruptcy Attorneys Garner NC (South Raleigh)
143 US-70 Garner, NC 27529 North Carolina
Tel: (919) 747-4400
Bankruptcy Attorneys Southport NC
116 N Howe St. Suite A, Southport, NC 28461 North Carolina
Tel: (910) 218-8682
Bankruptcy Attorneys Wilmington NC
116 N. Howe Street, Suite A Southport, NC 28461 North Carolina
Tel: (910) 447-2987