If someone has about $100K in lines of credit, can they cash it out and then declare bankruptcy to keep it?

Question

Can someone cash out all their lines of credit, credit cards, etc and then hide the cash somewhere and say they already spent it during bankruptcy proceedings? Would that wipe away the $100k and they could invest it somewhere safe? Is there a better way to do this? The money would be needed for retirement.

Answer 1

I doubt it. I think the bankruptcy judge will want an accounting of what happened to that $100k.

Answer 2

No, if you have the much money laying around, it isn't all exempt and you get to turn it over to the trustee. If you borrow it close to the time of bankruptcy, you can pretty much rest assured you won't get a discharge as that is blatant bankruptcy fraud (which, by the way, is a federal crime).

Answer 3

Bankruptcy is a lot more serious than you seem to think the hidding of any asset is very serious you would typically go to prison.
Would you be willing to do a year or so in prison for $100k?

Answer 4

Retirement?! It'll be hard to plan for retirement when the government sends you to federal prison for fraud. Also, you need to deal with your bankruptcy and poor financial skills before even considering retirement. Pay back what you owe and sleep well at night.

Answer 5

I’m under the impression that when you file for bankruptcy, debts incurred within a certain proximity to your filing are not forgiven. If that’s true, I’ll bet such a rule is in place to protect against stupid moves like this.

Answer 6

You can try it if you are willing to go to jail for fraud.

Answer 7

What you are proposing is inane and illegal.