Debt Loading

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.

BREAKING DOWN '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.

RELATED TERMS
  1. Bankruptcy Abuse Prevention And ...

    Legislation enacted by President George W. Bush in 2005 that ...
  2. IRS Publication 908

    A document published by the Internal Revenue Service (IRS) that ...
  3. Bankruptcy

    A legal proceeding involving a person or business that is unable ...
  4. Chapter 7

    A bankruptcy proceeding in which a company stops all operations ...
  5. Keep And Pay

    A bankruptcy allowance that lets an individual keep an asset ...
  6. Quick-Rinse Bankruptcy

    A bankruptcy proceeding that is structured to move through legal ...
Related Articles
  1. Retirement

    Should You File For Bankruptcy?

    Find out how to determine whether this option will help or hurt your financial situation.
  2. Investing

    Bankruptcy Consequences

    You've done the deed and are out from under your debts – or embarked on a repayment plan. What consequences can you expect and how long will recovery take?
  3. Personal Finance

    Bankruptcy

    Learn what happens when an individual or an organization files for bankruptcy.
  4. Personal Finance

    A Lifeline For Those Drowning In Debt

    Don't wait to be saved, find out where the lifesaving devices are and hang on tight!
  5. ETFs & Mutual Funds

    Why Banks Are Tightening Credit Lines for Oil Drillers (WFC, BAC)

    Discover the reasons lenders cut back credit lines of dozens of oil drillers and why the growing number of bankruptcies has not affected production levels.
  6. Investing

    Buying a House After Bankruptcy? It Is Possible!

    Buying a house after bankruptcy is not impossible. It just takes time to repair your credit score and demonstrate you're a good risk for a mortgage.
  7. Personal Finance

    Declaring Bankruptcy Is No Easy Out

    Going bankrupt can help pull you out of debt, but it's rarely the best option.
  8. Investing

    Taking Advantage Of Corporate Decline

    A bankrupt company can provide great opportunities for savvy investors.
  9. Markets

    Bankruptcy And Your Credit Score

    Use these 7 strategies to start improving your credit score from the huge hit it takes after a bankruptcy.
  10. Investing

    Saving On Bankruptcy Costs

    Going bankrupt is awful enough without worrying about ways to pay for it. Here's how to save on lawyers, filing fees and other inevitable costs.
RELATED FAQS
  1. What are the financial consequences of filing for bankruptcy?

    Learn about the various consequences, both positive and negative, that you can expect to result from your filing for bankruptcy. Read Answer >>
  2. When will bankruptcy be removed from my credit history?

    I filed for bankruptcy 10 years ago in November. Firstly, I do not know which category I applied for. ... Read Answer >>
  3. Should I file for bankruptcy or a debt relief program?

    I'm over $28,000 in debt (all current) and owed another $7,000 in medical bills. Should I file for... Read Answer >>
  4. Can I keep my credit cards after filing bankruptcy?

    Learn what happens to your credit cards after you file bankruptcy, and see when it might be possible to keep your card after ... Read Answer >>
  5. How will bankruptcy affect my ability to get credit in the future?

    Learn how filing bankruptcy affects your ability to obtain credit in the future, and find out how long a bankruptcy stays ... Read Answer >>
  6. Can personal loans be included in bankruptcy?

    Read about debts that are dischargeable when filing for bankruptcy. Learn about how personal loans are treated when filing ... Read Answer >>
Trading Center