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wtf? Putting student loans on credit cards and defaulting

venkman

venkman

Diamond Member
Now, this is all completely anecdotal, so take this with a grain of salt. Anyways, students who got all of those credit cards in college, or even today, are taking out those balance transfer checks and cashing them out to their limits. They then spend all of that cash on their student loans, which cannot be defaulted on.

They then declare bankruptcy or just stop paying the CC.

Anyone do this? Why would someone want to kill their credit like that? Forget about ever owning a home.
 
Originally posted by: Tooncesthedrivingcat
dude... I have closed loans for people with BKs 5 years ago.

BK doesn't kill you as much as people want to think.
Click to expand...

5 years ago is a lot different than today though. Were the new bankruptcy laws even in place back then?
 
This is the reason why we have the credit problem right now. People think they are entitled to something but don't feel like they are required to pay it back.
 
Originally posted by: venkman
Originally posted by: Tooncesthedrivingcat
dude... I have closed loans for people with BKs 5 years ago.

BK doesn't kill you as much as people want to think.
Click to expand...

5 years ago is a lot different than today though. Were the new bankruptcy laws even in place back then?
Click to expand...

What do the new bankruptcy laws have to do with this?

A bankruptcy comes off your record after ten years.
Many people are able to get into mortgages a few years after a Chapter 7 or 13, especially with a decent down payment.
A bankruptcy is supposed to be a fresh start, not a death sentence.

That said, the scenario with student loans you mentioned reeks of Douchebags Extraordinaires.
 
Originally posted by: venkman
Now, this is all completely anecdotal, so take this with a grain of salt. Anyways, students who got all of those credit cards in college, or even today, are taking out those balance transfer checks and cashing them out to their limits. They then spend all of that cash on their student loans, which cannot be defaulted on.

They then declare bankruptcy or just stop paying the CC.

Anyone do this? Why would someone want to kill their credit like that? Forget about ever owning a home.
Click to expand...

LOL! That actually is pretty smart. Sure their credit is fubarred for a while but by the time they really need it no big deal.
 
Originally posted by: SuperjetMatt
Originally posted by: venkman
Originally posted by: Tooncesthedrivingcat
dude... I have closed loans for people with BKs 5 years ago.

BK doesn't kill you as much as people want to think.
Click to expand...

5 years ago is a lot different than today though. Were the new bankruptcy laws even in place back then?
Click to expand...

What do the new bankruptcy laws have to do with this?

A bankruptcy comes off your record after ten years.
Many people are able to get into mortgages a few years after a Chapter 7 or 13, especially with a decent down payment.
A bankruptcy is supposed to be a fresh start, not a death sentence.

That said, the scenario with student loans you mentioned reeks of Douchebags Extraordinaires.
Click to expand...

I admit some ignorance on the new bankruptcy laws, but I thought they made it MUCH harder to get out of paying and it stayed on your record longer.
 
Jesus thats brilliant. Shit, *I* might try that!!

Why you ask? I'm tired f being the fucking sucker. The guy who bought a house he CAN afford. The guy who pays his OWN healthcare. The guy who lives within his means. Every other bastard in this country is walking off with everything he can carry and then some and I'm stuck holding my dick. Frankly, I'm fucking tired of getting screwed for being responsible.
 
Originally posted by: venkman
Originally posted by: Tooncesthedrivingcat
dude... I have closed loans for people with BKs 5 years ago.

BK doesn't kill you as much as people want to think.
Click to expand...

5 years ago is a lot different than today though. Were the new bankruptcy laws even in place back then?
Click to expand...

I meant they bked 5 years ago and are getting loans today. Sorry bout that.
 
Originally posted by: preslove
Originally posted by: frostedflakes
Why do people always have to try to game the system? What happened to integrity? :|
Click to expand...

Ask corporate America.
Click to expand...

Don't hate the player, hate the game. The rules are clearly laid out. I'm all for personal responsibility, accountability and ethics. But staring at 10s to 100K in student loans my ass would take advantage of the rules of the game. Not me personally just looking at it from a business decision and perspective.

The game said you can do this and it is within the rules. I'd feel a little dirty doing it, but I'd be richer because of it. I played within the rules.

It's brilliant really what the OP suggests.
 
No different from in the past when people applied for crazy number of credit cards at once and then proceeded to max out the line and the cash advance. They would then take the money and then move to Florida and buy a house for cash and then declare bankruptcy or stopped paying on the credit cards. On cards they couldn't do balance transfer or cash advance, they would buy goods and then resale on ebay or craigslist for like 70 cents on the dollar. Keep paying the minimum on the credit cards until all the goods sold. In Florida, you get to keep your house in bankruptcy. Why do you think OJ had his house in Florida?
 
Originally posted by: frostedflakes
Why do people always have to try to game the system? What happened to integrity? :|
Click to expand...

Responsibility & loyalty aren't rewarded as much as you've been told in school or by your parents, etc.
 
Originally posted by: Naustica
In Florida, you get to keep your house in bankruptcy. Why do you think OJ had his house in Florida?
Click to expand...


I very seriously doubt that you can get out of secured debt while keeping the secured part (house).
Further, bankruptcy law is federal, not state law.

You can reaffirm debt if you choose to. That means you get to keep paying on it.
Anything you don't pay on will be repossessed.
 
They used the Credit Card cash for the house in his example so the there is no debt owed on the house.
 
Damn, smart idea especially since my CC limit just got raised to a point where I could pay off my student loans with it..

hmm...
 
I am not entirely sure on this, but I imagine that creditors will be pretty diligent about noticing hundreds of thousands of dollars on credit cards and a paid off house. Assets and liabilities must be declared when filing bankruptcy.
If creditors that are owed a big amount see such a huge asset (paid off home), they will go after it.
Once you file, everything you own goes into the official care of the bankruptcy estate administrator. Everything you own can be sold to pay off creditors.
 
Originally posted by: SuperjetMatt
I am not entirely sure on this, but I imagine that creditors will be pretty diligent about noticing hundreds of thousands of dollars on credit cards and a paid off house. Assets and liabilities must be declared when filing bankruptcy.
If creditors that are owed a big amount see such a huge asset (paid off home), they will go after it.
Once you file, everything you own goes into the official care of the bankruptcy estate administrator. Everything you own can be sold to pay off creditors.
Click to expand...

But, if your just graduating with 20k of debt, no assets and 30k of available CC it makes sense to bite the bullet now.
 
Perhaps, I can't say.
Be aware that creditors will look into past transactions for at least 3-12 months. If anything looks suspicious, they can claim fraud.
Will they? I guess that depends on how much they're getting stiffed over and if they feel they can recoup enough money.
 
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