Can I Max Out My Credit Cards And Then Go Bankrupt?

The Implications of Exhausting Credit Card Limits Before Declaring Bankruptcy

Contemplating bankruptcy after exhausting your credit card limits can appear as an enticing solution for some. Yet, this action could potentially derail the smooth processing of your bankruptcy claim. Both your trustee and creditors are obligated to examine your spending behavior during the period leading up to your bankruptcy filing.

An Examination of Your Spending Behavior

Typically, a period of 90 days prior to the bankruptcy filing is scrutinized, but this can extend up to a year, or even five years if real estate assets are involved. This extension is especially possible if there’s a suspicion of any misconduct. Making a large purchase or taking out a significant cash withdrawal just before filing bankruptcy is deemed an offence under the Bankruptcy and Insolvency Act.

Note: Be mindful of your spending behavior especially if considering filing for bankruptcy. Any suspicious spending can be held against you.

Consequences of Misconduct

Should you be found guilty of such misconduct, several parties including the trustee, a creditor, or the Office of the Superintendent of Bankruptcy could file an opposition to your discharge from bankruptcy. You might be compelled to attend an examination under oath, explaining your actions and motivations. Consequently, your bankruptcy process may get prolonged as you may need to attend a court hearing to secure your discharge from bankruptcy.

Financial Obligations and Restitution

Furthermore, you’ll likely be required to pay the trustee an amount equal to the value of the purchase or cash advance you made. The trustee will then distribute these funds amongst your creditors. In extreme cases, if there’s evidence of fraudulent behavior, the case could be forwarded to the police for criminal investigation, potentially leading to charges of fraud. A finding of fraud could mean that the implicated debt will survive even after a bankruptcy or a proposal.

 

Remember: Your financial actions prior to declaring bankruptcy can have long-lasting implications.

 

The Cost of Misconduct

That big-screen TV or the financial aid you sent to your financially-struggling family members may not seem worth the trouble when faced with these potential outcomes.

The Answer to the Million-Dollar Question

Hence, in response to the question, “Can I Max Out My Credit Cards And Then Go Bankrupt?” – the answer is a resounding NO. Doing so could lead to serious consequences, far outweighing the short-term benefits of those credit card purchases.

Seek Professional Guidance

For more information on bankruptcy and debt solutions, feel free to reach out to Bankruptcy Canada. Alternatively, consider filling out the free bankruptcy evaluation form for a personalized consultation.

In conclusion, Can I Max Out My Credit Cards And Then Go Bankrupt? is a question with serious implications. It’s crucial to understand that while it may seem tempting, maxing out your credit cards before filing for bankruptcy can lead to serious legal and financial consequences. Always seek professional advice when dealing with such critical matters.

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