Inflated income, etc. provided on credit card applications - what will likely happen?

[anonzzz]

I've know about my fiancee's debt since prior to our engagement (not his most redeeming quality) but he recently informed me that many of the credit cards on which he has outstanding balances (nearing 50k total) were obtained by severely inflating his income, and in some cases even using jobs/positions that he never held on the applications. He explained it as a bad habit that snowballed out of control while he was in school and for periods of time that he was unemployed and struggling to make ends meet. He's a good person overall, not generally the type to lie, cheat or steal, and has managed to maintain his accounts over the years (mainly borrowing from Peter to pay Paul via balance transfers, etc.). But it has gotten to the point that BK seems like a very real possibility within the next twelve months or so. We began doing some research into this and discovered it can be considered much more than a "little white lie", especially during BK proceedings (a particular case in NY from early 2000's where a man received jail time and substantial fines for similar actions came up repeatedly). What might be his best course of action at this point? How likely is it that this would be dug up and scrutinized in the event that he files? Should he just come to terms with repaying the debt by whatever means necessary and then closing the accounts to avoid potential legal action? Any advice to us "newbies" here would be greatly appreciated.

[justbroke]

I'll answer this simply. Unlikely any issue if you stop using credit and create distance between the last time you charged or acquired credit, to the time you file. Do you have a case reference for the 2000 Bankruptcy case from New York? No one goes to jail for filing bankruptcy and I have never heard of anyone going to jail over an "adversary proceeding" in the bankruptcy setting for "fraud". There must be something else to that case.

Rather than try to find the worst that could happen, start thinking about not using credit and attempting to pay down some debt.

When you file, your financial situation and your financial "sins" are what they are. You file bankruptcy because you finally realize that whatever you were doing, financially, it is not working. You just need to swallow your pride, file your pleading (bankruptcy), and take your lumps -- whatever they are.

[anonzzz]

Thanks for the quick reply and honest appraisal justbroke. Here's a link to the case that we saw referenced over and over:

https://www.fbi.gov/buffalo/press-releases/2012/rochester-man-sentenced-for-loan-application-fraud

What do you think would be a reasonable amount of "distance" for this sort of thing time-wise before filing? The last time he applied (and was approved) this way was a couple months ago before finally coming clean. We're not in dire straits and could almost certainly continue making minimum payments as long as we need, however beginning to contemplate if a clean slate in the CC debt department is a wiser move long term. Thanks again for your help.

[LadyInTheRed]

There isn't enough information on how that person ended up prosecuted for fraud. Yes, it can happen. But, there has to be something that will inspire the creditor to look back at loan applications. Even if they do that, the most likely thing that would happen is that they would petition to have the debt ruled not dischargeable. There has to be a lot of money involved for the FBI to get involved as apparently happened in that case and for criminal charges to be filed. Most likely, you won't hear a peep from a creditor, especially large banks.

Your fiance should consult with some BK attorneys and ask them about this. I bet they will give him comfort.

Putting 90 days between the last charge and filing BK should be sufficient to avoid drawing the attention of creditors.