Clubchill Posted September 22, 2013 Report Share Posted September 22, 2013 Can I take a car loan prior to filing bk. I need the money on a paid off truck to pay for the bankruptcy. I would want to keep the car after bankruptcy. IT is worth more then my states exemption. Link to comment Share on other sites More sharing options...
BlackMetallic Posted September 22, 2013 Report Share Posted September 22, 2013 Are you going to file "pro se" or are you thinking of hiring an attorney? Your best bet would probably be getting a free consultation with one of the bankruptcy attorneys where you could ask this very questionI am not a lawyer, but taking out a title loan on your vehicle (I am assuming you're getting a tittle loan on that existing truck), may complicate things. It is totally understandable if that is your only way of paying for the Bankruptcy attorney, but I think that the Bankruptcy trustee may require you to pay him the entire non-exempt value for the car, as if you had never gotten a loan. Once you file, all of your property becomes the part of the bankruptcy estate, but the problem is that the bankrupcy trustee can, by Law, go back 12 months and consider everything you owned 12 months ago as part of the bankruptcy estate. So, if you've made any transactions that lower the value of your BK estate in the last 12 months, the Trustee can ask you to pay for the difference. Now, he probably won't be able to make you surrender the vehicle if you get the loan (although I am not sure, as Trustee have a lot of power and can cancel contracts and such), as you have a secured lender with a car as a collateral, but he may ask you to cough up the cash value for the entire non-exempt equity on your car. I think you ARE allowed to sell/loan non-exempt property and use the money for necessities (food, shelter, etc.), but you need to keep really good records on it. But I don't know for sure if using that money to pay the attorney fees will give the trustee the claw back powers on it. Anyway, this is from a non-Lawyer, is not meant to be taken as a legal advice, and is merely my interpretation of what I've read so far about Bankruptcy code (and I sure read a bunch). Your best bet is getting either a free attorney consult to ask this question or perhaps go on avvo.com site and ask a lawyer online this very same question. But, this is where things generally get complicated, as doing last minute transactions shortly before filing can make your case trickier. But, I do realize that bankruptcy attorneys can be expensive (mine has cost me quite a bit), so where do we get the income to pay them??? Good luck to ya! Oh, by the way, get the "How to File Chapter 7 bankruptcy" book by Stephen Elias (NOLO is the publisher). The book is amazingly helpful even if you end up paying for the attorney. I wish I'd discovered that book much sooner. Link to comment Share on other sites More sharing options...
despritfreya Posted September 22, 2013 Report Share Posted September 22, 2013 Just some clarifications. . . taking out a title loan on your vehicle. . . may complicate things. . . I think that the Bankruptcy trustee may require you to pay him the entire non-exempt value for the car, as if you had never gotten a loan. . .So, if you've made any transactions that lower the value of your BK estate in the last 12 months, the Trustee can ask you to pay for the difference. . . He may ask you to cough up the cash value for the entire non-exempt equity on your car. Not exactly. The poster is alluding to a "fraudulent conveyance" issue. However, since OP would be getting "an equal exchange for value" (the money for the lien placed on the vehicle) the transaction is not subject to the Trustee’s strong arm powers (assuming the lender properly perfects the lien on the vehicle under state law). Reducing the non-exempt value to the bk estate by placing that legitimate lien on the vehicle prior to filing does not change this. What could be an issue, as was mentioned, is having that cash from the loan lying around when the bk is filed. OP will be questioned on how the funds were used and OP needs to keep detailed records. And. . . paying the attny for the bk with those funds is not a problem. Once you file, all of your property becomes the part of the bankruptcy estate, but the problem is that the bankrupcy trustee can, by Law, go back 12 months and consider everything you owned 12 months ago as part of the bankruptcy estate. The bold above is not correct. What is "property of the estate" is based upon 11 USC 541. Under other provisions of the Code a Trustee can: 1. Set aside preferential payments to non insiders within 90 days prior to filing.2. Set aside preferential payments to insiders within 1 year prior to filing.3. Recover a fraudulent conveyance within 2 years of filing, or, if outside of 2 years, based upon the State’s fraudulent conveyance statute (usually 4 years).4. Liquidate property for the benefit of creditors (subject to allowed exemptions). In addition, if a debtor cannot explain the pre (or post) petition loss of non exempt assets a Trustee can seek to have a discharged denied under 11 USC 727 and/or have those funds turned over. This is the reason it is so important to keep detailed records of any "large" sums of money that are spent shortly before filing. If you can't prove what happened to the money, the Trustee will assume it is in your mattress. Your best bet is getting. . . a free attorney consult to ask this question. . . Absolutely! Des. 1 Link to comment Share on other sites More sharing options...
Clubchill Posted September 30, 2013 Author Report Share Posted September 30, 2013 THanks everyone for the responses. I have indeed consulted with a local attorney. He pretty much alluded to me what DEs has said. You are able to. But you would need to document 100 percent where that money went to. Lets say you needed new brakes , new tires on your car that is a legitimate expense, rent , maybe pay your utilites bills etc maybe a few new shirts for job intervies for some of his examples and the trustee wont chllaged that. But if you buy a big screen tv he will defiantly challeged that. Link to comment Share on other sites More sharing options...
bingo Posted October 1, 2013 Report Share Posted October 1, 2013 Some other acceptable uses would be to take the family to the dentist, eye exams and then any needed glasses/contacts. Link to comment Share on other sites More sharing options...
Clubchill Posted October 1, 2013 Author Report Share Posted October 1, 2013 Some other acceptable uses would be to take the family to the dentist, eye exams and then any needed glasses/contacts.Yeah for sure , they are dozens if not hundreds of legitimate expenses. I think the lawyer was just using a broad brush. He also told me if I was to do this he could not advise me on it . I would have to SPEND DOWN the cash and when your down to the last 1500k or so. Then you cut a check to the attorney for the 1500 to spend the rest of the cash. It is defiantly a option on the table Link to comment Share on other sites More sharing options...
BlackMetallic Posted October 3, 2013 Report Share Posted October 3, 2013 I realize this is slightly off-topic, but does the bankruptcy court in your district have any case info available online? You may be able to access the Court calendar, pre-hearing dispositions for the Judges, etc. I've been reading through a lot of tentative rulings in the BK court in my area. They help me understand what the most common bankruptcy "battles" are, what the arguments are, how rulings are decided, etc. Although, if you have a relatively straightforward case with little or no assets, you may likely not even see the Judge at all. But, it doesn't hurt to be prepared. Also, if you have some time, I'd recommend sitting in on some of the meetings of the Creditors just to get a feel of what the Trustees do and how they do it. These are open to the public, so you're free to go there and listen. Link to comment Share on other sites More sharing options...
jq26 Posted October 5, 2013 Report Share Posted October 5, 2013 Agree with Des above. I have numerous clients who come to me with no money to file, then need to place title loans on their vehicles in order to expedite filing due to a nasty creditor (think sheriff at the door levying on personal goods such as their children's crib and toys). Only once did the client get asked specifics about why they did this by the trustee. And it was by a nasty trustee who is always looking for a reason to torpedo attorneys. It was more along the lines of "were you advised to do this....", which had nothing to do with any potential use of strong arm powers. So do what you have to do. But please pay that nasty loan off shortly after you file. The interest rates are usually terrible. Link to comment Share on other sites More sharing options...
bingo Posted October 5, 2013 Report Share Posted October 5, 2013 Probably not necessary to add this caution but, be sure your lawyer checks to be certain the lender properly perfected their lein prior to your bk filing. And as jq26 mentioned, lawyers are not supposed to suggest a client take on more debt prior to filing so have an answer that doesn't throw him/her under the bus. Link to comment Share on other sites More sharing options...
Clubchill Posted October 8, 2013 Author Report Share Posted October 8, 2013 Well that is why he said he cant advise me to do the title loan. He basically spoke in "off the record terms" I plan to pay it off very quickly. THis is just a back up plan in case I lose my lawsuit to the JDB. I rather pay the court then the scumbag debt collectors. Thanks for your input guys. Link to comment Share on other sites More sharing options...
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