Personal Loan

[AvisNovak]

Hi Everyone!

I had about 13k of CC debt in March and took out a personal loan to pay off my car which was about $4000 and my phone with Sprint. The rest of the loan I paid off 3 of the 4 cards and left a balance on one of them. I had just started a new job and was confident that I would be able to pay the $587 for the personal loan as well as my other expenses. In April I lost my job due to personal issues and have only worked periodically since then. I unfortunately had to use my CC to pay monthly expenses and that quickly brought the cards back up to around 13k along with the now 15k I owe for my personal loan. I got a new job on August 11th but no way will I be able to pay for the CC's and the personal loan along with living expenses.

A couple of questions

1. Will paying off my car with the personal loan be an issue? Could I possibly lose the car?
2. I stopped using all my cards the middle of August when I decided to file chapter 7.
3. Will taking out a personal loan 7 months before I file be a problem for me?

I just have the CC debt and the loan and the only asset I have is my car. I make about 2,000k a month net with my new job. I am planning on filing pro se with the help of upsolve the beginning of November.

Thanks for any advice. I'm very very nervous.

[justbroke]

First, welcome to BKForum. You are among friends.

1. Will paying off my car with the personal loan be an issue? Could I possibly lose the car?

It's not an issue, per se, but you may have too much equity to protect in the bankruptcy. I don't know the Texas exemptions off hand, but if you have a large amount of equity in the vehicle, it may be difficult to protect the vehicle. There are some strategies in this area, of having an unencumbered vehicle, but many attorneys will not advise their clients to incur new debt.

2. I stopped using all my cards the middle of August when I decided to file chapter 7.

That's good.

3. Will taking out a personal loan 7 months before I file be a problem for me?

Usually it is not a problem but will come down to whether you made attempts to pay them back. The creditor will try to gauge whether you never intended to pay this back. This is why the elapse of time and payments make this less likely. Since this is a larger personal loan, $15K, expect the creditor to look. That doesn't mean it makes it more likely that the creditor will complain.

I just have the CC debt and the loan and the only asset I have is my car. I make about 2,000k a month net with my new job. I am planning on filing pro se with the help of upsolve the beginning of November.

Hopefully upSolve will help you with the glaring issue of the equity in the vehicle.

Since you stopped using the cards, another strategy may be to wait until those large charges have age at least 90 days. this removes the "presumption" that you made those purchases while you were insolvent. Technically, that applies to "luxury" purchase and/or cash advances. Distance -- in time -- is always the best medicine.

[AvisNovak]

Looks like I'm ok with the car. It has a private party sale price of about $5,700 however even if it was my only car and valued high It looks like it's exempt so I think that's good. As far as the loan I have made April -July payments and have just one outstanding payment so far. I plan on filing around November 15th so that would also leave over 90's days since I've paid or used my cards.

My main goal is to prevent garnishment of wages before I file. I have read that it usually takes about 120 days before a creditor will garnish wages so hopefully that's true. It's just an extra PIA if I have to deal with that.

Personal Property Exemptions Under Texas Law
Texas exemption laws allow you to exempt the entire value of one motor vehicle per licensed household member, as well as up to $100,000 in personal property per family or up to $50,000 if you are a single adult.

[bcohen]

Remember that no consumer creditor can garnish wages or levy bank accounts until and unless they file a lawsuit and obtain a judgment. Most creditors will first send the debt to their in-house collections team for a few months, and then farm it out to a collection agency for a few months more before they even think about filing a lawsuit. With the current economic situation, I would expect creditors to wait even longer, because they understand that hitting someone with a judgment who is unemployed will result in the debtor declaring bankruptcy when they get back on their feet, which means no recovery.

Also, in Texas, consumer creditors are not able to garnish wages anyways, although they can seize your money from bank accounts (once they have a judgment, of course).