4 ms·

Doesn't sound like fraud. If you rack up a bunch of debt, but take out a mortgage on your already paid off house to get rid of the debt, is it fraud? You had

• kbenson 8y ago
  > If you rack up a bunch of debt, but take out a mortgage on your already paid off house to get rid of the debt, is it fraud? That isn't what was described, to my understanding. What was described seems sort of like transferring all your unsecured debt to your spouse, and letting her go through some individual bankruptcy that doesn't affect you. > You had a perfectly good house, but sometimes decisions have to be made. If you're allowed to transfer debt around to related entities where negative repercussions don't affect you, the normal checks and balances of the system have failed. I imagine a similar situation (even if not purposefully attempted) is why student loans are actually protected from bankruptcy. Parents used to pay for college, because students couldn't really afford it. Parents don't necessarily want to go into bankruptcy because they may have other assets affected. If the students take out the loan, if they go into bankruptcy in the few years after graduating, the parents aren't affected. Students are a risky bet because bankruptcy has fairly little cost for them that early in life, so the loans would be very hard to get. To incentivize lenders to give the loans, you have to protect them.