smoothmunkey

Bankruptcy fraud is very much a crime, once which the DOJ takes very seriously.

Even if one doesn't get nailed for full-on bankruptcy fraud, the sort of scheme discussed is a classic bad faith filing, which would get booted from court and the debtor wouldn't be able to obtain a discharge... FOREVER.

FTR 787

Reading your sig right after your post, I dunno what to believe too many mixed messages!

MasterCharge

don't want to bash you, but you sound like a corrupt politician

ronnyk

This is simply-- and unequivocally-- false. Plus, I would not use a slash ("/") because it is both fraud (a) as a crime (in the sense that you are knowingly misrepresenting an intention to repay the loan as an inducement to obtain the loan proceeds); and (b) under the Bankruptcy Code, an exception to discharge.

As a former bankruptcy attorney who represented debtors, I have attended my share of hearings where debt-run-up activity was explored in depth for the very purpose of establishing an exception to discharge. There are forensic accountants whose specialty is to trace money from it source, and I doubt any of the "diversification" techniques employed by MSers would pose any hurdles.

As an aside, and as someone who has bought a fair number of homes in my time, a substantial hurdle (and one I always found annoying) is establishing the source of monies being used towards the purchase. I suppose one could choose to not disclose the account into which all of those MOs are being deposited, but at the end of the day, if you intend to show up at closing with $100K in cash there are going to be questions asked. I think generally the idea is to make sure that money is not an undocumented loan which would throw off the calculations as to appropriate debt burden, but a large amount of undocumented cash is also likely to raise questions about your declared income, and ultimately your credit-worthiness.

smoothmunkey

That's the point!

smoothmunkey

You forgot "illiterate" - I wrote "once which", instead of "one which"

smoothmunkey

Would love to see a 341 hearing in which the debtor was a heavy MSer -- "It's not my fault I was unable to liquidate all those GC; I bought them with the good faith expectation that I'd be able to liquidate!"

toomanybooks

I'm wondering when the IRS will decide that a guy who generates $100K in cashback, by MS-ing full-time, now has some nice taxable income, subject to penalties and interest.

berger6696

I'll second this. I've purchased 15 properties over the past 5 years, and you have to bring CERTIFIED FUNDS to the closing table. I'm not sure how this plan could even get off the ground.