Please explain to me why more people don't follow a formula like this:
Converting all their assets into exempted assets (for which there are tons of options, regardless of your state -- ERISA-qualified retirement plans; annuities; life insurance plans; trusts for their children/themselves; homesteads shared as joint tenancies with a spouse; accounts in the spouse's name; lifetime subscriptions and memberships; gifts to family and reliable friends; LLCs and partnerships; expensive degrees; expensive stuff that is needed for one's livelihood; plastic surgery; dental work; high-quality yet unsaleable personal effects; undervalued art, unmatured antiques; encumbered assets of all kinds...). Then:
Opening numerous credit cards and other lines of credit in strategic order, and racking up a giant revolving debt between them, all while using any bankruptcy-vulnerable assets they have to secure still more loans. Then using all this credit -- or things bought on credit and sold for cash -- to
- pay for anything owed to children or ex-spouses; to the IRS; to student loans; and for anything else that absolutely must be paid for now; then
- to utterly maximize their assets in all the exempted categories proposed above; then
- to buy everything they think they might want or need for the next 8 years in the discretionary category, taking care that there is no single item of real value there by making all of it very much their own; then
- to travel the world and/or have all the "priceless" experiences they could dream of, with less than zero need to collect a salary; and finally
- to retain an excellent bankruptcy lawyer.
After 8 years of the fun described above: Filing for Chapter 7 and getting all their debts erased. Then living off the seriously substantial assets they acquired in part (1) for a little while until they can find themselves some more credit with which to repeat steps (2) and (3) until they die.
I thought about the legal and moral side of this plan (which I have no intention of carrying out, since I have assets, thank Gd, among other reasons). I may have a few details wrong, but by and large, the general idea seems to be legal and non-tortious. Lying to the bankruptcy court is not involved at any point. I'd stop short of saying that such a plan is in "good faith," but I don't know that anyone is exiging or even pretending to exige such a thing in the context about which we are speaking. So why not do as I am suggesting--or rather, why don't more people do so?
tl;dr: Why don't people use credit cards to fund bankruptcy-exempted assets, then file for bankruptcy, live off those assets, get new credit and repeat?
*Different but related: Why don't more people run up their credit cards and skip the country?
Somewhat different but related: Why is it possible to just take out a ton of credit cards, max them out and default in 7 years?*