5 ms·

What would happen if you transferred your student debt to a credit card and then declared bankruptcy?

peter303 7y ago
You are unlikely to get a high enough credit to cover student loan debt if it is high. Else everyone would be doing it. Personal loans and HELOCs are even cheaper and hard to get with bad credit.
- dragonwriter 7y ago
  > You are unlikely to get a high enough credit to cover student loan debt if it is high. Else everyone would be doing it. Well, no, because bankruptcy isn't an option most people want to pursue, and personal unsecured credit is far more expensive than student loans with the same principal unless you discharge them in bankruptcy.
mmaurizi 7y ago
Student loan debt is still not removable through bankruptcy, even if you transfer it to some other form of credit. Also, transferring loans around with the intent to declare bankruptcy is fraud, and while you may skate on that initially you won't when you're in court.
- sokoloff 7y ago
  Once student loan debt is "transferred to" (paid from, really) another form of credit, it's not student loan debt anymore. If I borrow from Peter to pay Paul, I have Peter debt now, not Paul debt.
  - owenmarshall 7y ago
    On a balance sheet? Sure. In a court? If you borrowed from Peter to pay Paul, knowing that Peter’s debt is discharged in bankruptcy and then you declare bankruptcy? I have a feeling a not too impressed bankruptcy judge will be entering a sizable judgement against you.
    - gizmo686 7y ago
      The issue is that you took out a load with the intent of declaring bankruptcy. You would be in just as much trouble even if you didn't use the money to pay back non dischargeable debt.
xyst 7y ago
Logically, the debt would be discharged. Credit card debt is not a protected entity from bankruptcy. Maybe the CC company could come after you if they did their research?
ceejayoz 7y ago
Most loans don’t allow payment via credit card, and credit card companies can file to have debt excluded from bankruptcy if they can show you incurred it with no intent to pay. Don’t try this.
lowercased 7y ago
most people don't have the sort of credit card free balance available to do that sort of transfer in the first place. if you've got student debt of $50k but only $5k available on a credit card... you're not going to be able to do this.
astura 7y ago
This would be an example of fraudulent conveyance if done purposefully. On top of that its going to be extremely difficult to get tens of thousands of dollars in unsecured credit, especially if you're in a position to declare bankruptcy.
dragonwriter 7y ago
> What would happen if you transferred your student debt to a credit card and then declared bankruptcy? If you did it knowing you were insolvent and planning to file bankruptcy, it would be illegal, and that would be taken into account in your bankruptcy (it might effect the dischargeability of the credit card debt or have other adverse consequences.) Of course, credit cards try to keep up with your credit circumstances and adjust your credit lines appropriately, to guard against that general class of scenarios. If you did it routinely while in good financial shape but later declared bankruptcy with the balance still on your credit card accounts, it would be discharged like any other credit card debt.

You are unlikely to get a high enough credit to cover student loan debt if it is high. Else everyone would be doing it. Personal loans and HELOCs are even cheaper and hard to get with bad credit.

dragonwriter 7y ago
> You are unlikely to get a high enough credit to cover student loan debt if it is high. Else everyone would be doing it. Well, no, because bankruptcy isn't an option most people want to pursue, and personal unsecured credit is far more expensive than student loans with the same principal unless you discharge them in bankruptcy.

mmaurizi 7y ago

Student loan debt is still not removable through bankruptcy, even if you transfer it to some other form of credit. Also, transferring loans around with the intent to declare bankruptcy is fraud, and while you may skate on that initially you won't when you're in court.

sokoloff 7y ago
Once student loan debt is "transferred to" (paid from, really) another form of credit, it's not student loan debt anymore. If I borrow from Peter to pay Paul, I have Peter debt now, not Paul debt.
- owenmarshall 7y ago
  On a balance sheet? Sure. In a court? If you borrowed from Peter to pay Paul, knowing that Peter’s debt is discharged in bankruptcy and then you declare bankruptcy? I have a feeling a not too impressed bankruptcy judge will be entering a sizable judgement against you.
  - gizmo686 7y ago
    The issue is that you took out a load with the intent of declaring bankruptcy. You would be in just as much trouble even if you didn't use the money to pay back non dischargeable debt.

xyst 7y ago

Logically, the debt would be discharged. Credit card debt is not a protected entity from bankruptcy. Maybe the CC company could come after you if they did their research?

ceejayoz 7y ago

Most loans don’t allow payment via credit card, and credit card companies can file to have debt excluded from bankruptcy if they can show you incurred it with no intent to pay. Don’t try this.

lowercased 7y ago

most people don't have the sort of credit card free balance available to do that sort of transfer in the first place. if you've got student debt of $50k but only $5k available on a credit card... you're not going to be able to do this.

astura 7y ago

This would be an example of fraudulent conveyance if done purposefully. On top of that its going to be extremely difficult to get tens of thousands of dollars in unsecured credit, especially if you're in a position to declare bankruptcy.

dragonwriter 7y ago

> What would happen if you transferred your student debt to a credit card and then declared bankruptcy? If you did it knowing you were insolvent and planning to file bankruptcy, it would be illegal, and that would be taken into account in your bankruptcy (it might effect the dischargeability of the credit card debt or have other adverse consequences.) Of course, credit cards try to keep up with your credit circumstances and adjust your credit lines appropriately, to guard against that general class of scenarios. If you did it routinely while in good financial shape but later declared bankruptcy with the balance still on your credit card accounts, it would be discharged like any other credit card debt.