What happens ifI take out a cash advance on a credit card and then file for bankruptcy?

UPDATED: Oct 15, 2011

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What happens ifI take out a cash advance on a credit card and then file for bankruptcy?

I am debating whether or not to file bankruptcy. I am stuck with a credit card that is maxed out. Now I am getting calls from the credit card company every 10 minutes. Can I get into legal trouble by maxing out a different credit card that I have only to turn around and file bankruptcy? I want to take the available credit ($1500) from my credit card that I am in good standing with to use towards another financial need.

Asked on October 15, 2011 under Bankruptcy Law, Colorado


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

Yes, you could definitely get in trouble.

First and foremost, it is very likely--almost certain, in fact--that a transaction like the one you describe would be correctly seen as a deliberate attempt to defraud a creditor and would therefore be disallowed from the bankruptcy; so this debt would likely not be discharged and the bank could sue you and use all the normal processes to collect.

Second, it is possible that under some circumstances, it could even be seen as a criminal act--a form of theft by deception, by taking out a loan (which is what a cash advance is) under false pretenses, when you had no intention of repaying it. While less likely than the above consequences, it's not impossible you could face criminal charges.

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