Need money, can I use an asset?

[pcn]

If a person needs funds close to filing, can they get a loan using an asset as collateral? It would serve a dual purpose, temporarily funding basic living expenses and well as home repair, and partially protecting some equity. Is there anything to avoid, or be careful about? Thanks.

[music12]

what asset is it? and is it for living expenses?
if you secure a loan with collateral, they can take the collateral from you during bk unless it's exempt.

[AngelinaCatHub]

Well, you could lose this asset as it would be named as a creditor. It could also be construed as a form of fraud that, 1. you are using an estate asset and converting it (as in hiding it) to your own use, 2. you are devaluing it as the Trustee is likely to sell and split the proceeds among your creditors.

It depends a lot on when you are going to bk. I would distance a long way after doing this. 'Hub

P.S. You said it right in your post "partially protecting some equity". This will not be a good thing. Honesty is a top priority as the Courts are assuming all to be honest and do not tend to mis trust most. However, even the appearance of an impropriety can rain down havoc upon you if the Court suspects any anomaly.

[pcn]

We had some water damage to our home and have been repairing floors/flooring/HVAC, and are tapped out right now. We need to finish addressing the drainage issues that caused the damage to prevent a repeat occurrence. I'd also use some of the funds for school clothes and to pay the atty. All we have of any value is my truck, which is worth between 10-12k depending who you ask. I would borrow 8k. I was under the impression that you could sell anything as long as you used the funds for normal living expenses and it was sold at fair market value. Is making a loan on that same item in some way different?

[AngelinaCatHub]

Knowing more of your situation; I think you would be OK. You have an emergency situation that would get worse if you do not handle it right on. This is explainable and your truck is exempt to 1K anyway. If you reaffirm your loan on the truck that would be better and I don't think the Trustee will question your motives with this situation. 'Hub

[pcn]

That is our hope, but we want to make sure all "i's" are dotted and "t's" crossed. I believe AL has no vehicle exemption, only a 3k personal property exemption, so the value of the truck is still a little outside the exemption, even with a lien.

[AngelinaCatHub]

I don't know AL exemptions, but does DH wish to keep his truck? Then he could reaffirm it and this would satisfy any Trustee question as to it's estate value. He has to abandon a reaffirmed asset. You best get your house fixed. Due to a hurricane damage in 2004, we got wet carpet. Had to move out and tear up the place. I got sick with the big C and could not finish. Rain came into damaged perfectly good wall. Now that I'm doing great, I had to completely replace a supporting wall, 25 feet of it. I did the work myself as it would have cost 10K to have it done. Cost me only material and time. God gave me the time. 'Hub