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Can I Take Out A Loan Right Before I File Bankruptcy?

When money is tight it can be tempting to take out a loan to get caught up on back due expenses. In some cases though the added burden of having to make another monthly payment takes its toll, and sooner that you had hoped you find yourself back in financial distress and this time with more debt than what you had previously. For many, the answer to overwhelming debt is to file for bankruptcy, but the timing has to be just right.

If you have taken out a loan just prior to filing for bankruptcy you may be questioned about your motives. For instance:

  • Debt incurred a short time prior to your bankruptcy case being filed can be considered debt obtained fraudulently. If the lender is able to show that you applied for the debt with the intention of never making a payment but instead seeking the benefits offered by bankruptcy, you may be ordered to repay the debt even though the rest of what you owe is eliminated in your case.
  • When filling out a loan application, part of the process usually includes a check of your income to see if you are able to make the payments on the loan. If the application shows you are able to pay and then quickly thereafter you file for bankruptcy and claim you are unable to pay your debts as they become due, red flags are raised.
  • Some lenders view a first payment default as evidence in and of itself that credit was extended and the borrower never had the intention to repay the loan. The lesson here is that you have to take special care to make sure you are taking steps that make sense financially and do not give off the appearance of bad faith.

The answer is hard to come by when you find yourself in this type of financial dire straits. If you are unable to pay your monthly obligations, you should seek answers to find out what options you have prior to taking any drastic financial missteps. Our team of knowledgeable debt management and bankruptcy professionals is here to help. Call us today so we can review your situation and offer guidance on what will work best for you.

For more information about bankruptcy, contact us at We will help by coming up with solutions that work for you.

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