Home equity loan before filing?

[mm2009]

I live in PA, I have about 30K in equity if you base it off the appraisal done in June of 2009 (or less if you go by Dec of 2005).

I applied for a home equity loan, initially thinking i'd purchase a new/used car with this money (my old car isnt worth much at all and ready to die any day now, over 10 years old).. (i understand now this wont work, as they'd want the new car at least if did the whole car with this money).

Now i'm thinking i will take out say 12K, use 6k to pay my attorney in my divorce.. (maybe) 4k as down payment on a car, or put the 4k in my checking account.. the other 2k for possible settlement money with divorce..

I also recently used my one credit card for groceries and gas.. i think i may have screwed myself up.. i just officially retained my lawyer on BK today though (although 2 weeks ago i had an initial consult and since used a card or two for groceries/gas)..

So on the home equity loan, would i have to wait 3 months before actually filing or stopping payment on credit cards, and maybe then that money could be used to help me get to the 20K max equity in the house to be able to keep the house (short of testifying its worth less or getting another appraisal which hopefully comes out lower)?

Or can i take out the home equity loan and immediately stop paying on cards (once i secure a new vehicle)?

Still awaiting official details on this, but figured i'd ask around for advice too.

Thanks

[OhioFiler]

I'm not sure I would take on additional debt knowing you intend to file BK.

[mm2009]

I'm not sure I would take on additional debt knowing you intend to file BK.

Well, at least with the case of my divorce and settling.. i may not have a choice.. the child custody could reach 6k or more before it can be settled, and all of my credit lines are maxed out at this point.. i've ran out of options unfortunately.

I'm running into, issues, at least getting a new car loan, even now with a credit score of 650, credit ratio of about 48%.. i'm guessing i may run into the same issue, if maybe instead of a homeequity i try to refinance and take X dollars out as cash (IE: make the loan that is refinanced higher than what i currently owe.. allowing for 10k or similar)..

I'm assuming even on a refi, they may do the same look at credit to income ratio/credit score and force me into higher % if they even offer a loan?

[OhioFiler]

Well, at least with the case of my divorce and settling.. i may not have a choice.. the child custody could reach 6k or more before it can be settled, and all of my credit lines are maxed out at this point.. i've ran out of options unfortunately.

I can understand your situation. Please expect the lender may well file an adversarial proceeding against you and it's possible the debt will not be dischargable. Please be careful.

[mm2009]

I can understand your situation. Please expect the lender may well file an adversarial proceeding against you and it's possible the debt will not be dischargable. Please be careful.

Well, i had no intentions of finding a way to make this debt not be paid off, ie: i figured since it was a secure loan or if i were able to refinance.. i'd just keep paying on it, through the bankrupcy and after basically..

Yeah it really sucks to rack up 10 or 12k in an equity loan, but the rates are pretty low, if paid off longer term.

Now its a question of do that or just refinance, but i fear that they will turn me down on refinance as they have on some car loan attempts (or hike the rate).

[whipster1]

You will face scrutiny for taking out a loan, secured or not, with the intentions of filing BK. At my 341 a debtor got in hot water for buying 2 new cars within months of filing...the UST simply said "why did you take out these loans when you were insolvent?" The debtor stammered around and it was hard to watch.

[AngelinaCatHub]

You are dancing with fraud, my friend. If you can take on this loan, you can buy a good used car with a couple of payment amounts. You will not only screw up your bk, but what has brought you to both things, such as a divorce, and bk? Could it be bad decisions? I hate to make you feel badly, but I say it as I see it. You need to think this out better. It sounds very bad to me, but that is only a personal opinion. 'Hub

[mm2009]

You are dancing with fraud, my friend. If you can take on this loan, you can buy a good used car with a couple of payment amounts. You will not only screw up your bk, but what has brought you to both things, such as a divorce, and bk? Could it be bad decisions? I hate to make you feel badly, but I say it as I see it. You need to think this out better. It sounds very bad to me, but that is only a personal opinion. 'Hub

Any good used car with the intention of making it 7 years, means 2007 and newer, still arrives at a very similar payment as an 09 would, ie: if shortening the duration of the loan.. i personally dont think it pays to go used, unless its a really good deal. Right now i'm leaning towards a year end 09 sedan that is marked pretty far down, but given the new car loan rates, still amounts to a moderate payment unfortunately.. to me its all relative, but i do intend to keep this as low as possible (trade etc).


My attorney had initially told me to go get a new car now, before hand.. though i hadnt had the chance to discuss the home equity portion.

Why would taking a home equity out for the intention of completing the divorce be considered fraud, especially when i intend to pay it in full, even at 20 years payoff.. sorry but i dont see it here.

What i expected was maybe i need to wait awhile before filing, which is understandable.

[AngelinaCatHub]

Any good used car with the intention of making it 7 years, means 2007 and newer, still arrives at a very similar payment as an 09 would, ie: if shortening the duration of the loan.. i personally dont think it pays to go used, unless its a really good deal. Right now i'm leaning towards a year end 09 sedan that is marked pretty far down, but given the new car loan rates, still amounts to a moderate payment unfortunately.. to me its all relative, but i do intend to keep this as low as possible (trade etc).


My attorney had initially told me to go get a new car now, before hand.. though i hadnt had the chance to discuss the home equity portion.

Why would taking a home equity out for the intention of completing the divorce be considered fraud, especially when i intend to pay it in full, even at 20 years payoff.. sorry but i dont see it here.

What i expected was maybe i need to wait awhile before filing, which is understandable.

Well as stated, it is my opinion. Taking on new debt in the shadow of a future bankruptcy does not equate to me. Your personal marriage problems are none of my business. I too divorced for my own reasons. 23 years, 20 years with Mrs. I don't intend to repeat this as I do not intend to bk again.

We have purchased very good "cherries" in used cars. One was a Chrysler NewYorker 89, single owner, non smoker, 95K and every thing worked. This was $1500. My god-daughter wrecked it. Mrs. drives a 93 ex-police car purchased at auction for $800. I put in $300 for tires battery, an alternator and that was four years ago. Gets 28 MPG.

If, and only if, you can pay this back, I see no problems. I only state that to the Court, Trustee and any interested party (as we are) looks bad.

I do not mean to offend you in any way as well as I cannot read your mind or intentions. I react on the input with what vast experience I have being here. If anyone did more screw ups in a bk than we did out of ignorance, we sure did. We learned, and by the Grace of God and a very nice Trustee, we paid our selves out of this. It took time, but we sure will not repeat this again.

I wish you well, and please stay with us. I wish your personal situation could be mended but that is your own business. I had my reasons, too.

You are a valued contributor and please inform all of us as to what you do. After all, you are anonymous, but we all learn. 'Hub