Can my boyfriend make large purchases before bankruptcy? 30 Answers as of July 15, 2011

Since you are troubled enough to ask the question means you already know the answer. Bad behavior before filing such as concealing assets or going on a spending spree can stop him from getting a discharge in bankruptcy. The petition and schedules specifically ask the debtor about this type of behavior. If a debtor lies, he can go to jail. It's a federal crime - and even cute little old ladies have been sent to jail. A bankruptcy discharge goes to the "honest but unfortunate" debtor who has had a run of bad luck. Hogs get slaughtered. There are always some people who think they can cheat their creditors and outsmart the bankruptcy court. They always think they are clever and that they are the first person to think up such a scheme. Lawyers have a technical name for such people. We call them "prisoners."

If he owns these things by purchasing them outright, he needs to be able to exempt them. Otherwise the trustee can take them and sell them. If he is buying them on credit, the creditor can file a lawsuit in bankruptcy to keep those charges from being discharged and he would still be liable after the bankruptcy.

Let's be honest with each other. You know that this isn't right. In fact I am sure if you and your boyfriend think long and hard about it you'll understand why this is called bankruptcy fraud. The 2005 Bankruptcy Abuse and Prevention Act was created with people just like him in mind. Spending your credit with the intent of discharging it in bankruptcy is a federal crime. Bankruptcy crimes are punishable by fines and prison time. If he is doing this, most likely the debts will not be dischargeable, his bankruptcy will be dismissed and he may be charged with crimes. But you already know this is unethical because it feels like stealing, so I'm sure it comes as no surprise when a snide and harsh attorney tell you it's wrong and a crime to boot. And lastly, if your boyfriend is filing bankruptcy, his attorney should have already told him this. And if his attorney did not, shame on him. And If your boyfriend thinks he is smart enough to file his bankruptcy without an attorney, shame on him. Maybe its time to find a new boyfriend?

Yes he can, but it will probably not do him any good. Depending on the purchase, he may have to repay the money. There are some exceptions like a home (homestead) purchase (with a $125K maximum value in FL if within 1215 days)

Not on his credit cards. That would be fraudulent, his discharge could be denied, and he could end up in Federal prison.

It depends. Is he using credit cards to make these purchases or is he paying cash? If he is paying with a credit card then any charges made within 3 months of filing for bankruptcy is presumed fraudulent and he will probably be forced to pay it back. If he is paying cash then he will still need to disclose the asets he is purchasing in his bankruptcy paperwork.

Running up the credit cards and taking cash advances before filing bankruptcy is the quickest way to have all of the debt deemed non-dischargable and sometimes subject you to criminal fines and jail time.

It sounds like (1) Your boyfriend is an idiot and (2) He will end up with a mess. You may want to look for a better boyfriend. Large purchases before a bankruptcy are a huge problem. If charged, the debts will not be dischargeable and may result in a denial of discharge. Also, the assets may not be exempted, and be taken from him. If it can be shown he deliberately committed fraud, he could even go to jail. But he will mess up his case regardless. The gifts will also result in the Trustee suing the recipients so he will ruin their lives, as they will have huge legal fees and will have to give the gifts, or their value, back. Your friend had better get a good lawyer. And he'd better stop his plans. And, seriously, look for a boyfriend with a future (and brains).

These types of luxury purchases are not permitted, will likely be challenged by the creditor and have top be repaid, and may even jeopardize his right to a bankruptcy discharge.

NO, you should not make large purchases prior to filing bankruptcy. It could be considered fraud and you will be liable for the debt.

Purchasing large assets in anticipation of bankruptcy may constitute fraud that would not be dischargeable.

No, it is not OK.... it is bankruptcy fraud. The credit card company can demand repayment and he could end up having his case dismissed or the discharge denied. There is also the possibility of criminal charges. Purchases within the last 90 days of filing that are for luxury items or services are presumed fraudulent but the credit card company can go back up to a year before filing and demand payment of the amounts charged that were for luxury items or services. What he is doing is very risky. It is not just giving back things he bought or paying for them later but having those debts not discharged ever and even going to jail. T

No. The court can unwind any purchases, or set them aside from the bankruptcy. Courts see this behavior all the time, and will not let him get away with it. You should caution your boyfriend that he is playing with fire.

Bad and possible fraud, especially if he's using creditto do it. If he's using his own money and the money would have been protected anyway, should not be an issue.

The creditors could file Objections to Discharge on the basis of fraud. They could allege he knew he was filing Bankruptcy when he made the purchases, had no intent to repay the debt, so the debt should not be discharged.

It is called Fraud.

This is a bad move. It is essentially fraudulent conduct. He is risking his discharge and he is opening the possibility to getting the recipient's of his gift sued. While there are ways to protect some assets prior to filing, this is not the way to go. He should speak to a bankruptcy attorney immediately. He is also bound by threat of perjury and a $250,000 fine to disclose these transfers on his bankruptcy petition.

We call that bankruptcy fraud. At the least the creditors will prevent his discharge. At worst, well, you don't want to go there. Hope it was worth it.