Loan after filing, but before 341?

[tay666]

I know we aren't supposed to take on new debt while still in an active BK.
We filed July 1, and 341 isn't until Aug 20.
Just had some automotive issues come up that are going to put a huge dent in our budget. I can probably squeek by the next few weeks, but it would mean not paying any utilities for the next month and really cutting the groceries to the bone.
I was thinking about going down to my credit union and getting a small personal loan (around $500). I think they would actually give it to me.
They are completely unaffected by the BK, and they have my IRA to use as colateral. I'll be through this little bump in the road after a couple pay checks (a month) and will easily have the money to cover the loan payments.
I'd ask my lawyer, but he is closed now, and I need the cash by Wednesday to pay gas, electric, and water before they are late. If I have my wife call tomorrow, I already know it will be at least 2 or 3 days before we hear back from him.

I'm leaning towards just stopping tomorrow to see if I can get the money.
The estate is set, as of when we filed.
I'd rather not start off my fresh start with late payments to my utilities.
If it comes up at the 341, I will just tell him, I needed it to fix my only transportation to work.
Just curious if anyone has been in this position, or have heard any horror stories of others attempting this.

[Pandora]

you arent supposed to incur any new debts at all... until after your discharge. I think you're taking a huge chance of having your case dismissed....

ETA: I'd call the utility company(s) and see if you can pay half payments for now - and catch up later when you are able to. You'd also be surprised at how far rice, beans, 2 chicken breasts and some tortillas go . You can do it!

[momofthree]

Do not take on new debt! It's not worth the risk of getting your bk dismissed!

You have to be a couple months late on your utilities before they actually shut them off. Call them and work out a payment plan. It's time to learn to live without credit, get creative, make it work. Necessity is the mother of invention. Good luck!

[BobMango]

People keep saying you can't take on new debt until you are discharged but this is just not how the law works. If you are in a Chapter 7 there is no prohibition against taking on new debt in any of the controlling legislation. Once you have filed you can apply for as much credit as you want. You are not violating any laws or regulations. If you have a case that might be close or have a creditor you expect will file an AP, you could jeopardize your case, but taking on new debt during your case is not specifically prohibited.

As to whether it's prudent or not, that's another question. Most folks are so intimidated by the whole process that they think they need to put their entire financial life on hold pending discharge. I started rebuilding as soon as my case was filed, then really revved it up once my notice of no distribution was filed.

The bottom line is that any debt you take on after your filing date will not be dischargeable for a long time.

[tay666]

It's time to learn to live without credit, get creative, make it work. Necessity is the mother of invention. Good luck!

I think I have a handle on living without credit.
We haven't had any for 41 months now.
Been living cash only since March 2007.

It just happened that this problem surfaced at exactly the wrong time.
Ohio only has exemptions for $400 cash and savings, so we spent it all just before filing (11 days ago) on exempted items that would not raise any eyebrows.
So we had no cash reserves when our only transportation died over the weekend.
Last weeks paycheck went for the house payment and repairs on the car. My next paycheck (7/23) will go towards finishing paying for the repairs, the car insurance (1 day late, and it is canceled, no if's and's or but's) and the rest has to be put away for the $500 needed to strip the lien on our house.
The rest of which will need to come from the following check, as well as the next house payment.
After that, it's smooth sailing.
IF it wasn't for that lien strip, that has to be done during the BK, I'd be fine with my next paycheck.
But when you only bring home $672 every 2 weeks, that unexpected $500 legal fee throws a wrench in things. Throw in over $400 for a blown head gasket, and it really starts to spiral.
Luckily, I know the mechanic and he did the work, with me just paying for the parts now, and the labor next payday. So, I guess, technically, I already took on debt.

[momofthree]

Are you filing 13 or 7? I was under the impression that a lien strip could only be completed in a ch.13.

[tay666]

People keep saying you can't take on new debt until you are discharged but this is just not how the law works. If you are in a Chapter 7 there is no prohibition against taking on new debt in any of the controlling legislation. Once you have filed you can apply for as much credit as you want. You are not violating any laws or regulations. If you have a case that might be close or have a creditor you expect will file an AP, you could jeopardize your case, but taking on new debt during your case is not specifically prohibited.

That is what I was thinking also.
Especially since my mailbox is being flooded with auto loan offers, specifically stating that they specialize in lending to those who are in CH7 BKs.

I personally, can't imagine wanting to take on that kind of debt after just eliminating $150,000 of debt that has been hanging around our shoulders for over 3 years now.

But a $500 loan would carry payments of around $50 a month for a year.
And with the OT I am working right now I can get the whole amount put away in a couple months. So, if things do get tight, I still have the money to make the payments.

[BobMango]

Are you filing 13 or 7? I was under the impression that a lien strip could only be completed in a ch.13.

My thoughts exactly. And if you are in a 13 then you definitely do need permission to take on new debt!

[tay666]

Are you filing 13 or 7? I was under the impression that a lien strip could only be completed in a ch.13.

CH7.
It's a judgement lien from one of my creditors.
Not the lien that the mortguage company has on the house.
One of the collection agencies for one of my CCs got a judgement a while back. And they just got a lien on the property like a week before we filed.
Didn't find out about it until the day we signed the papers.
I only owe the bank $11,000.
The creditor has a lien for $45,000 (thanks to interest, and fees more than doubling the original debt)

[tay666]

My thoughts exactly. And if you are in a 13 then you definitely do need permission to take on new debt!

Oh, yeah.
I know.
In a 13 you need permission for just about everything.
New debt, selling an asset, etc.

[Exployer1234]

I know if you are filing chapter 7 after your 341 meeting you are able to have new debt. Personally I would not take the loan out prior to the 341 meeting. If you are filing chapter 7 and do decide to take a new loan out prior to your 341 meeting it will not be discharged. You have to wait 90 days and in some cases 180 days for the debt to be discharged.

Also if you do take a loan out do not take out more than 500 dollars. Otherwise the trustee can make the company give him that money back. That is why I said wait until after the 341 meeting if you are going to do any loan.

If you call any of the utility companies they will work out something with you. I had 2 surgeries in less then 6 months and I had to do that will all of the utility companies. The bills were also 2 months behind. You will be shocked at what they will do for you.
Also many companies have plans that can prorate your bill each month. You have to be current to enroll in the programs, but it can save money. They will average your bill for a 12 month period.

[tay666]

If you call any of the utility companies they will work out something with you. I had 2 surgeries in less then 6 months and I had to do that will all of the utility companies. The bills were also 2 months behind. You will be shocked at what they will do for you.

Not around here.
If you are late 2 months, they shut you off the day after your 2nd missed payment.
They don't care.
They hear sob stories all the time. Last I knew, unemployment rate in our county was around 17%
They don't care if it is the dead of winter Dominion will shut your gas off even if it 10 below outside. Unless you can get into one of their programs.
Which, last time we checked, there was a 2 year waiting list, as demand far outstrips the allocations from either the company or the government.
And First Energy isn't any better with the electric. Got behind last winter trying to keep up on the gas bills and they were going to shut us off, completly disregarding the medical order not to because of my wife's breathing machine.
And neither will allow you on a budget plan until you go 18 months without being 1 day late.

Thankfully she started getting her SSD in February, and we have money again. Been current, and getting ahead since then.
Which is how we finally put together the $1500 to finally file.

[tay666]

Quick update.
Decided against the loan.
I managed to sell a few household items which will cover one of the utilities, and make sure I don't run out of gas before next payday.

[mermaids614]

I got the BestBuy Rewards Mastercard and and Orchard Bank Credit Card 30 days before I was discharged on my Chapter 7. I still have them. My attorney told me that I could have gotten a tote the note car or something before my 341, although I didn't try. I think it depends on the creditor. If they are willing to lend you money, knowing you could add this debt to your petition.