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I am a merchant who will be going bankrupt within the next 2 months and was thinking about taking out a merchant cash advance...I wanted to do this so that I could pay off some of my secured debt that will not get expunged in BK but am worried that somehow this debt will not be discharged. Merchant cash advances are not even really loans so much as discounted money up front for a percent of your future recievables so if I close my doors am I even liable once the credit card reciepts stop coming in? Attorney answers (4)
Reputation Level 9
Answered over 2 years ago.
Chapter 7 Bankruptcy Attorney in Sacramento, CA.
What you're talking about is fraud, and if you do this you could not only be looking at a non-dischargeable debt, but could even see a federal criminal charge for fraud upon the Court. While it doesn't happen often, I have seen it brought for less.
In short, don't do it. Try and play within the rules.
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Reputation Level 15
Answered over 2 years ago.
Bankruptcy Attorney in Monterey, CA.
Here's the deal - don't. You could end up with criminal charges against you, the bankruptcy being thrown out, and more debt which you are not able to get rid of. Then you add the criminal attorney fees, the fines, etc. and you end up in a significantly worse financial situation.
Just go with a good Bankruptcy attorney and do it right, don't try and game the system...part of my practice is criminal, and 1/3 of my practice is bankruptcy and I can tell you that what you are talking about doing brings a lot of high priced criminal work vs. lower priced bankruptcy work. Matthew Williamson www.MontereyBayBankruptcy.com 
Reputation Level 19
Answered over 2 years ago.
International Law Attorney in Washington, DC.
I agree with my colleagues, what you are contemplating is criminal fraud. The risk is not worth it.
Reputation Level 8
Answered over 2 years ago.
Bankruptcy Attorney in West Des Moines, IA.
Some debtors do try to "load up" on debt before filing bankruptcy. Debt acquired through loading up often is not discharged. Worse, if the amount is high enough, the debtor may lose their discharge completely and could even be prosecuted for fraud.
For most people that means it is best to avoid cash advances and balance transfers before filing bankruptcy. You certainly should not do any sort of cash advance. Debtors who have had large credit card use before filing should discuss it with their attorney. Related Questions3 Attorney answers: 
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