Recent Borrowing Makes Bankruptcy Too Risky

Recently, I received a phone call from a gentleman who has been calling me off and on for over two years.   When he first contacted me, he had run up about $65,000 in credit card debt that he had used to invest in the stock market.  Now, his total debt is almost $140,000 and includes a $45,000 cash advance taken in August and a $20,000 cash advance taken a few weeks ago.

It seems that this gentleman always calls me a few weeks after he has taken out a new loan.  Each time I tell him that filing bankruptcy would be too risky because of the recent activity.   I definitely get the sense that he does not want to file and that his actions may be a subconscious way to sabotage the process.

In his case I advised him to wait 8 months to a year before filing.  He should discontinue any use of any unsecured credit and he should establish a track record of paying his existing creditors every month.  Given the amount of the credit he received, I suspect that he will face an objection regardless of when he files, but his odds improve if he lets this new debt age a little and if he makes close to a year’s worth of payments.

If you find yourself with the need to borrow $20,000, $30,000 or more, take a few minutes to speak to a bankruptcy lawyer before you sign on the dotted line.  Don’t act and hope that you can find a lawyer to clean up your mess.  There are certain transactions that will make success in bankruptcy impossible and you will not get the results you want if you put yourself and your lawyer in an impossible position.