Buy a house with MS (do not attempt)

Old Jan 17, 14, 1:38 pm
  #16  
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Or take all the cash to Vegas, and put it all on Red or Black on the roulette table! Makes as much sense.
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Old Jan 17, 14, 1:48 pm
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There is no guarantee that paid-off $1 million house will be off the hooks during bankruptcy proceedings.
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Old Jan 17, 14, 2:05 pm
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Originally Posted by Jaimito Cartero View Post
Or take all the cash to Vegas, and put it all on Red or Black on the roulette table! Makes as much sense.
I've seriously considered this.
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Old Jan 17, 14, 3:00 pm
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Originally Posted by BarnyardRomeo View Post
It is considered fraud, to charge up a bunch of credit cards and then declare bankruptcy when that was the plan the whole time. However, I admire OPs outside-the-box thinking. There are those among us who just come on here and read posts and follow what everyone else is doing, and there are a few who give things a great deal of thought, trying to invent new methods for getting ahead in life. Sure, OPs idea is bad because its illegal and gives people who are against the poor more ammo to critisize any laws that provide for the poor. But perhaps OPs idea might spark an idea in someone else's head that is a new, legal, and positive advancement for MS. We can't have progress unless we discuss lots of ideas, some of them bad and some of them good.
The way I look at it is if I am doing anything with MS, I am not going to risk my credit score and history for years and years to come just to get a free trip to Asia or Europe on business class or cash back. While the OP might be one of the first few people to put it down on paper, I am sure many have thought about ways to do MS related with a mortgage. I am sure someone has thought of trying to put a down payment on a house with CC. However the second it involves ruining your own credit and any chances of you borrowing money from any lender for years and years to come then the MS should not even be considered.
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Old Jan 17, 14, 3:14 pm
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This (and the convert SL to CC debt scheme) sounds great in theory, but if you think about the steps necessary to make it actually happen, it usually falls apart. I'm not sure you'd be at risk for criminal-level fraud because I think intent would have to be proven, which would be hard.

Problems:

1. You will subject all your unprotected assets to creditors if you default on your CC payments. So if you have brokerage accounts, cash savings, etc. you will lose them.

2. To get a CL large enough to do this, you generally have to claim substantial income on credit applications. Lying on credit applications IS fraud that's easily provable, and will get you prosecuted.

3. Having a substantial income means wage garnishment, not discharge of your debts, when you head to bankruptcy. In addition, having the skills or education to earn a substantial income means the judge may not grant full discharge because you will be deemed to have the means to repay your creditors.
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Old Jan 17, 14, 3:15 pm
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Originally Posted by LoveMountains View Post
There is no guarantee that paid-off $1 million house will be off the hooks during bankruptcy proceedings.
In some states (like Texas) there is unlimited homestead protection. And yes, it has been abused to shelter $ in multi-million dollar homes.
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Old Jan 17, 14, 3:17 pm
  #22  
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Originally Posted by LoveMountains View Post
There is no guarantee that paid-off $1 million house will be off the hooks during bankruptcy proceedings.
I recall that Florida and Texas had no limit on homesteaded houses. This was during the 2008 crisis, so things might have changed.
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Old Jan 17, 14, 4:10 pm
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I believe either OP has already done it or has heard of others that have but maybe without going broke.

The idea of buying foreclosed homes in no-limit homestead states where homes were selling for as low as $0.20 on the dollar is too lucrative to pass up for some.

My family lost their new $250k home in '08 along with jobs then 3 yrs later heard that the home was for sale for $75k. You can MS $75k in one month - Many here do as high as $200k or higher.

Bankruptcy not req'd to profit when you luckily catch the bottom of housing bust - thoughts?
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Old Jan 17, 14, 4:50 pm
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Originally Posted by redbirdsj View Post
This (and the convert SL to CC debt scheme) sounds great in theory, but if you think about the steps necessary to make it actually happen, it usually falls apart. I'm not sure you'd be at risk for criminal-level fraud because I think intent would have to be proven, which would be hard.

Problems:

1. You will subject all your unprotected assets to creditors if you default on your CC payments. So if you have brokerage accounts, cash savings, etc. you will lose them.

2. To get a CL large enough to do this, you generally have to claim substantial income on credit applications. Lying on credit applications IS fraud that's easily provable, and will get you prosecuted.

3. Having a substantial income means wage garnishment, not discharge of your debts, when you head to bankruptcy. In addition, having the skills or education to earn a substantial income means the judge may not grant full discharge because you will be deemed to have the means to repay your creditors.
This applies more to buying a house than to student loans.
For the sake of argument, imagine a 23 year old making, say, 35k with 100k student loan debt.
1. Presumably, this person won't have much in the way of unprotected assets; they have a negative net worth.
2. Not necessarily true. I've been churning for less than a year and have a CL twice my income, and there are still a number of popular issuers I haven't hit up yet. I would think most people with no negative marks on their credit would be able to run up a 6 figure credit limit in a year or two.
3. Debt service on $100,000 in credit card bills with their ridiculous APRs is pretty much ridiculous on a $35,000 salary.

I managed to escape college without student loan debt, but if I had a significant amount, I would be sorely tempted to try this.
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Old Jan 17, 14, 9:36 pm
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There has been at least one case which someone has been prosecuted for trying to pull of something like this.

http://www.creditcards.com/credit-ca...fraud-1282.php
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Old Jan 17, 14, 9:51 pm
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Wouldn't it be a lot easier to get all the credit you can , say $150K.

Take all the cash advances you can then buy actual items and resell them on Ebay, etc. Then dump the cards in bankruptcy after they are maxed out, making min payments along the way.

Between cash and resell if you buy the right items you would be able to get ~ $125K of that $150K in credit in your pocket.

Then you have the cash, no way for anyone to find it, no house to sell, etc, etc,etc

I believe there is a crime called pre meditated bankruptcy though
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Old Jan 18, 14, 4:09 pm
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I think a better plan would be to buy a house above your means as long as you have a good feeling real estate values will increase. Then use MS, and the float, to make mortgage payments month to month. Huge payoff when you sell... as long as real estate prices do actually increase.
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Old Jan 18, 14, 4:56 pm
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Originally Posted by Jaimito Cartero View Post
I recall that Florida and Texas had no limit on homesteaded houses. This was during the 2008 crisis, so things might have changed.
Definitely no change in TX. If you live there, nobody can touch it. Except of course the county tax collector and the IRS.
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Old Jan 18, 14, 5:03 pm
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Originally Posted by flyertalkingallday View Post
There has been at least one case which someone has been prosecuted for trying to pull of something like this.

http://www.creditcards.com/credit-ca...fraud-1282.php
The applicant lied on his application though which is a no no. But what if you're completely honest with your application? Then what?
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Old Jan 18, 14, 5:51 pm
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Originally Posted by CrediPig View Post
I think a better plan would be to buy a house above your means as long as you have a good feeling real estate values will increase. Then use MS, and the float, to make mortgage payments month to month. Huge payoff when you sell... as long as real estate prices do actually increase.
But if you have a house you have something for them to go after................Also don't forget you have to pay capital gains when you make money on the sale of house ( and not paying those will have the IRS on your back) unless you buy another house equal to or for more than the sale price of the house you sold.

You also paying mortgage interest, property taxes and insurance and upkeep while you own the house plus 6% to sell.

I'd rather have $100K( or 2 or 3 or more ) stowed someplace and show the courts I am absolutely flat broke and lost it all at casinos....................then do some sob story and join gamblers anonymous.

If you planned this out it could work. I am 44 and have never been late on a bill in my life. If I got all the CC's I could I bet I could get $500K in credit.............sell my house, stocks, etc and put everything in cash.

Over a period of about 2 years max the cards and play the gambler story. Stop in a casino a couple times a week for 2 years and run your players card. Buy $500 in black , green and $5 chips at a roulette table and walk away with $475 to cash in at the window. Do the same at another table.

Say you lost it all gambling...........no reason why a guy would pay his bills in full the day they post all his life and then go broke within 2 years unless he developed a serious ( using this example) gambling problem.

I'm sure it has been done already

Last edited by flyer4512; Jan 18, 14 at 6:02 pm
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