if we qualified for a credit union line of credit, could it be used for car repairs?

[Zombie13]

So, this may be my last question regarding car and house repairs. Thank you for all the responses thus far.
We are members of a credit union, and from time to time they advertise a line of credit.
So - if we were to request a line of credit, and in the unlikely event we qualify: could we use it to pay a portion of car and house repairs?
Would this be grounds for dismissal? We certainly do not want that.
I am asking, since I feel I need to investigate any and all options, and determine if they are appropriate to pursue.
Thanks!

[shipo]

I suppose it depends upon the rules for Colorado, I know here in New Hamster I would never have gotten approval for any kind of credit; here at least I would have needed to apply to the Trustee for approval for a loan before any lender, credit union or otherwise would have given me a loan.

[justbroke]

You would need Trustee and Court approval. If you're going to go that route, talk to your attorney for either an emergency order to incur debt, or do it post hoc.

Most credit unions summarily deny credit applications when they see an active bankruptcy.

[Zombie13]

Thanks shipo and justbroke.
This confirms my suspicion. Pursuing a line of credit doesn't 'feel right' to me.
So. The alternative is, attempt to make more money. This has already happened anyway, by way of a job change, off-cycle pay raises, etc. And the trustee raised the payment via plan modification as a result, understandably, with no threat of dismissal. Our income did increase substantially over 10% from the beginning of our plan.
Thinking out loud here:
With 11 payments remaining, if we increase revenue via the current job and/or any 'side hustles', any plan payment increase will most likely not be a dollar for dollar match.
The trustee thus far has requested prior year tax returns and pay stubs in July/August, which is when we were officially confirmed. I assume the next request could occur anytime between April 15 and July/August 2021. The request date is actually irrelevant, since the 2020 filing numbers are not affected by a request date; they will not change. A final plan modification might be possible starting with September, as happened in 2020, provided I get some surprisingly large salary increase (around 10%... LOL yeah right... which is extremely unlikely) around the same time the trustee is reviewing/evaluating the current plan.

Long story short: if we increase income, good for us, and the trustee may consider modifying the plan, yet again. Fine. Bring it on, fill my dance card. But I reason, we are not prevented from increasing income. If the increase is substantial (as before), we notify the trustee, or the trustee will request info from us anyway, and request a plan modification; not the end of the world. Sure an increase in income would build up over time, whereas a transmission replacement is a big hit all at once.

OOOhhhh yeah, and, By The Way...

Immediately after the trustee raised the payment by $371 per month in September 2020 (because our income went up), shortly after, in October, when I was making my health elections, I discovered the health benefit expenses increased by $200 per month starting January 2021. So... the $371 increase was approved based on my income in September 2020. Conveniently, my income took a -$200 per month hit starting January 2021. Therefore, I reason, I would have to recover (earn) at least $200 per month more of income (with raises, side hustles, etc), just to break even with the income at the September 2020 level, when the plan modification was confirmed/approved. So, when the latest paystub is requested, it will most likely show either: a) a small net deficit vs. Sept. 2020, maybe $25/month; b) the same values from Sept. 2020; or c) a small net increase vs Sept. 2020, maybe $25 per month.

[shipo]

So, let me make sure I understand; your last payment to the Trustee will happen before 15-Apr-2022; yes?

If so, assuming you don't file your 2021 taxes before your discharge, the Trustee shouldn't ever see any increases in pay. During my fifth year I not only got a significant pay raise, but I also got two "spot bonuses" which increased my year over year income by over 15%. I apprised my attorney of that fact and she strongly recommended I A) schedule my final payment to the Trustee just after my 59th payment was posted and that month was closed, and B) delay filing my taxes, even if that meant filing for an extension, until after the discharge.

I guess that was a long way of saying, go get that side hustle, your Trustee won't know.

[justbroke]

Unfortunately for me, my last year ended in May and the Trustee wanted my tax refund. This caused a delay in my discharge because I didn't think that the Chapter 13 Trustee "really" wanted my tax refund!

As far as increases in income are concerned, I agree with shipo. Those decisions are usually after-the-fact. An income increase in 2021 won't be realized by the Chapter 13 Trustee until April of 2022 (or beyond based on the speed of review).

[Zombie13]

Thanks shipo and justbroke.
Last payment will be made end of January 2022.
Business taxes need to be filed by March 15 of each year.

We do already have a side hustle (LLC); very low revenue as of late... things like, covid, furnaces, car repairs and such have been real motivation killers. The income (such as it has been) has been calculated as business income (we use turbo tax for business, and personal : two software apps), and added to our 1040 form. So, the income has always been added to our W2 income, and the trustee has not appeared interested. We have to file by March 15 of each year; so, filing an extension may be worth considering.

shipo - cool, sounds like a plan.

JB - aw man that's no good!

[shipo]

Thanks shipo and justbroke.
Last payment will be made end of January 2022.
Business taxes need to be filed by March 15 of each year.

We do already have a side hustle (LLC); very low revenue as of late... things like, covid, furnaces, car repairs and such have been real motivation killers. The income (such as it has been) has been calculated as business income (we use turbo tax for business, and personal : two software apps), and added to our 1040 form. So, the income has always been added to our W2 income, and the trustee has not appeared interested. We have to file by March 15 of each year; so, filing an extension may be worth considering.

shipo - cool, sounds like a plan.

JB - aw man that's no good!

If your last payment is going to be payed in late January next year, you should be dismissed before 15-March. Last year I made my final payment on 04-February, it was posted on the 6th; my discharge was put in force on 04-March.

[flashoflight]

We have a rule where you have to get permission to incur more than $1000 in debt. I took a liberal position on that and decided it was OK to apply for lines of credit early in the bankruptcy as long as I didn't incur more than $1000. I would put $5 charge on the credit card and pay it off the next day. This way the credit line would be available and I could ask for forgiveness after the fact rather than permission beforehand if the turd hits the fan.

[shipo]

We have a rule where you have to get permission to incur more than $1000 in debt. I took a liberal position on that and decided it was OK to apply for lines of credit early in the bankruptcy as long as I didn't incur more than $1000. I would put $5 charge on the credit card and pay it off the next day. This way the credit line would be available and I could ask for forgiveness after the fact rather than permission beforehand if the turd hits the fan.

I really wish New Hampshire was that liberal; our rule here is you have to get permission to borrow enough for a cup of tea.

[Zombie13]

You would need Trustee and Court approval. If you're going to go that route, talk to your attorney for either an emergency order to incur debt, or do it post hoc.

Most credit unions summarily deny credit applications when they see an active bankruptcy.

So, this is a question I have had on my mind for quite awhile. Generally speaking: if a person in a chapter 13 were to qualify for credit (credit card, line of credit, loan, etc.) and uses a portion of that credit, and pays it off: how would the trustee know/find out/be notified? Is this something the lender would have decision-authority over (ie do they have the option to notify the trustee, or is it a notification automatically generated)? As I've mentioned before - I try to think of all scenarios, good and bad. I just want to understand the process.

[shipo]

During my Chapter 13 I wondered the same thing, I even went so far as to apply for a credit card, Capital One if I recall correctly; I was immediately declined because of the Chapter 13 on my credit report. To extend that further, even six weeks after my discharge I was declined, and this was for a secured credit card, because of the bankruptcy.

Long story short, with an active Chapter 13 on your record, most lenders, even those considered to be "bankruptcy friendly" will categorically refuse to approve you for a loan without some sort of support from the Trustee and/or the courts.

Edit: One other thought; any credit applications filled out today will result in a "Hard Pull" against your credit record; these hard pulls stay on your record for two years and reduce your credit rating for the first year. Given you are within 12-months of your final payment, having a hard pull from this year could hurt your chances next year for getting a credit card.

[Zombie13]

Thanks shipo . I just have this "1984/Orwellian/Big Brother Is Watching You" mentality about this; can't shake it. In general, what financial information, transactions, and events does the trustee have legal access to view? And this is where the original, more detailed question derives from.

[justbroke]

Other than the fact that a debtor sends in a copy of his/her tax filing, the Chapter 13 Trustee isn't doing anything. They don't have as much power as one would think and they are not watching every case. I don't know of any Chapter 13 Trustee to run a debtor's credit. The Trustees can only use the power of subpoena to obtain documents and that generally would require an order of the court. They do have the power to "request" documents from the debtor but can then go to the court to compel the production of those documents.

The moral of the story is to not get on the Trustee's radar or bad side. While they don't like spending an inordinate amount of time on any single case, those cases deserving special attention will receive it.

[shipo]

Thanks shipo . I just have this "1984/Orwellian/Big Brother Is Watching You" mentality about this; can't shake it. In general, what financial information, transactions, and events does the trustee have legal access to view? And this is where the original, more detailed question derives from.

In my case, it was my annual tax return, period, full-stop, the end.