Written by San Francisco bankruptcy attorney, Jeena Cho
So you’ve found yourself in dire straits. Your income is far less than your bills and you simply don’t know what to do next. You’ve decided to file for bankruptcy.
This is good.
The upsetting part is when I hear about people in that exact same situation who think deciding to file for bankruptcy is a free-pass. They think they can go out on shopping sprees and max out their credit card limits because they’re going to see all of their debts discharged.
Sounds tempting, doesn’t it?
Don’t do it.
Realistically speaking, the bankruptcy court is actually aware of such schemes and so are the credit card companies. Do you think if you run up your AMEX card and file for bankruptcy, AMEX will complain? - You betcha! The United States Trustee also monitors cases as well. The courts will decide which debts you get to discharge and they will not discharge debts that were obviously last-minute attempts to take advantage of the situation.
They have a word for it, too. It’s called fraud.
Even worse? Some people max out their credit cards and then give the goods to others to hold onto until after the bankruptcy is complete, hoping to protect that newly acquired property from seizure and sale. If the giver and receiver both know that the transaction is taking place to shield one from bankruptcy laws, both can get into trouble for breaking laws governing fraudulent transfers.
It sounds extreme, but it’s true. Spending money to keep your lights on is one thing. Buying a new wardrobe with “free” money you’ll never have to pay back is another situation altogether.
With the holidays rapidly approaching, it may be tempting to think, “Oh, I’ll just buy everyone gifts and then file for bankruptcy.” The risk you run is losing your discharge at best and possibly prison at worst. Don’t get yourself into trouble. Contact a San Francisco bankruptcy attorney like myself before you make such decisions. Lastly, you should always be honest with your attorney.
Image credit: Andres Rueda
