Should I Max out my Credit Cards before Filing Bankruptcy?

We have heard of attorneys encouraging people to max out their credit cards before filing bankruptcy.  Our attorneys strongly disagree with this advice for several reasons.  First it is dishonest.  Some people would say that  filing bankruptcy is dishonest in itself, so why not get as much out of it as you can.  Filing bankruptcy is not dishonest.  Our attorneys help clients who have come to the realization that paying all of their creditors is either not possible, or puts such a burden on them and their family that it is necessary to file bankruptcy to obtain peace in their home.  This action is not dishonest, it is honestly evaluating options to get out of a bad situation, and bankruptcy is one of those options.

What is dishonest is making a promise to repay money when you do not intend to repay it.  We advise clients to first decide which option they think is best to get out of their current debt situation.  If they plan to file bankruptcy, then they need to stop borrowing money, unless there is a plan and an intention to repay the debt even after bankruptcy.  One example is borrowing money to buy a car, when you intend to keep the car and pay the debt after a bankruptcy.  When someone borrows money with a promise to pay it back, but at the time they borrow it they have no intention of paying it back, this action is fraud.  Our attorneys do not advise our clients to commit fraud, or assist them in doing so.

Other arguments that are made to justify fraud, is the old “everyone is doing it” and “you will not get caught.”  These statements are not true.  Not everyone is doing it.  Most people are struggling and trying to pay their bills, some have even drained retirement accounts and all their savings before deciding that there is no other option than filing bankruptcy.  (We recommend speaking with an experienced bankruptcy attorney before withdrawing retirement funds to pay bills.)  The banks have employed attorneys and investigators to determine when there is a pattern of fraud and pursue recovery after bankruptcy.  Bankruptcy laws also have provisions that make it easy for the banks to recover in some situations when someone borrows money prior to filing bankruptcy.  Most people that file bankruptcy are honest and simply found themselves unprepared for a terrible financial storm with reduction in home equity, reduction in salary, reduction in stock values, and increase in expenses.

One advantage of working with an experienced bankruptcy attorney is the direction and guidance you  will receive to help you avoid the temptation to do anything that would look like fraud.  You can then avoid the consequences of an accusation of fraud which could result in a worse situation after you filed bankruptcy than before.

To speak to an experienced bankruptcy attorney call The Carroll Law Firm PLC at 623-551-9366.


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