Bankruptcy to get rid of student loans?

(Study Tips, Dealing With Stress, Maintaining a Social Life, Financial Aid, Internships, Bar Exam, Careers in Law . . . )
User avatar
dingbat
Posts: 4976
Joined: Wed Jan 11, 2012 9:12 pm

Re: Bankruptcy to get rid of student loans?

Postby dingbat » Sat Nov 24, 2012 9:10 pm

philrozzi wrote:This may or may not work, it's not as straight forward as yes or no because laws as very malleable. Basically it's up to each individual judge. I had a co worker who was caught snorting coke at work, was fired and eventually was granted unemployment. Just recently my bosses hired a kid straight out of the marines who was offered full time work but he was able to only work part time because of school. My boss found out he was drawing unemployment from the military and to make a long story short he is having to repay 10 grand of unemployment for refusing the full time work. He fought it in court but to no avail.
I remember in college a friend of mine was collecting unemployment at home, disability where he lived for UG, was getting an education grant and was on a college sports team. He's very lucky he didn't get caugt
philrozzi wrote:if someone is real serious about these kinds of things there are companies online that will sort of "wash" your money. They charge your credit card under different business names each time and send a payment to you or to whom ever, for a percentage.
This is the sort of thing that can get you thrown in jail

User avatar
XxSpyKEx
Posts: 1741
Joined: Wed Dec 27, 2006 5:48 am

Re: Bankruptcy to get rid of student loans?

Postby XxSpyKEx » Tue Nov 27, 2012 12:31 am

dingbat wrote:
philrozzi wrote:if someone is real serious about these kinds of things there are companies online that will sort of "wash" your money. They charge your credit card under different business names each time and send a payment to you or to whom ever, for a percentage.
This is the sort of thing that can get you thrown in jail


I imagine it would also be difficult to "wash" 200k this way (and without getting caught). Not to mention, it's pretty impressive to even have a $200k credit line available. You'd probably need pretty stellar credit and significant unencumbered assets/savings to have that much credit. (It's not the 90s anymore where credit card companies give away cards to with unlimited credit lines to anymore with great credit.) I suppose it would be possible across something like 50 credit cards, but what company seriously has enough shell corporations to safely "wash" that kind of money? A judge is going to be looking at all this crap when you file a bankruptcy petition, so it has to look legit (in other words, a single charge of $4,000 on 50 credit cards to "XYZ Dildos Inc." is going to be pretty sketchy looking).

NotMyRealName09
Posts: 1396
Joined: Mon Nov 09, 2009 5:50 pm

Re: Bankruptcy to get rid of student loans?

Postby NotMyRealName09 » Tue Nov 27, 2012 2:40 am

This thread still going?

Answer is no, you cannot just charge it all to your credit cards then go bankrupt. You're describing a classic case of fraudulent transfer and an avoidable preference. The nuance here is that it will be the credit cards who will likely end up with non-dischargable judgments against you, as I'm not sure even a bankruptcy trustee can avoid a transfer to the Fed Government.

Most likely outcome is that credit card debt ends up not being dischargable because you racked it up with the purpose of defrauding the credit card issuers. If Fed Government were just some private unsecured lender, they'd have to give the money back to the trustee and accept a pro-rata distribution. But since I doubt Uncle Sam will give the money back, the bankruptcy judge will probably nail you with non-dischargable credit card debt based on the amount you paid off on your student loans.




Return to “Forum for Law School Students”

Who is online

Users browsing this forum: No registered users and 3 guests