Debt Loading

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DEFINITION of 'Debt Loading'

A practice employed by unscrupulous entrepreneurs and businesses who anticipate filing for bankruptcy. Debt loading works by taking on a debt load by spending all cash reserves, maxing out lines of credit and credit cards, and failing to pay bills in anticipation of bankruptcy protection.

INVESTOPEDIA EXPLAINS 'Debt Loading'

There are laws to prevent this type of behavior. For example, personal debt acquired within 90 days of filing for bankruptcy may be excluded from legal protection.

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