loans against my own property?

[sofarindebt]

I currently have two loans out - one for my life insurance $800 that I said I would pay back in February, and one with a pawn shop for my wedding ring for $650.

What will happen in bankruptcy? Can they take the life insurance money and can they take my ring? Or can I just reaffirm both of them?

[HHM]

These are not the too common, but BK is not much help with either as neither debt is dischargeable in the normal sense.

1. The Ring, yes, the pawn shop can keep and sell your ring. If the creditor has possession of the property, and you file BK, then they can sell the property.

2. The loan on the life insurance is a little more tricky. Most often, you will have to incure the various penalties associated with non-payment (depending on how much value is built up in the Whole Life Policy).

But, you can pay them back, (you just can't budget for them on your schedules).

[sofarindebt]

HHM, but if I pay the loan back in full

for my ring, will they consider it a preferential payment, since it is a secured loan? For example, they will not go after Chase for PP on my car payments, which would be over $500, so why would they go after the pawn shop?

[Spartan]

This is all depending on the timing, as in when you actually redeem the ring back. If it is after the BK, and you didn't list the pawn shop as creditor, then who cares? If it is before filing, then the ring is considered part of the BK assets, subjected to forfeiture and exemption rules. They won't go after the pawnshop for the money. They will focus on te ring you have, instead.

I don't know why you want to include the pawnshop in your BK filing. You have no liability there.

After filing bk, you can redeem the ring and no one the wiser.

BTW, don't pawnshops have a limited number of days when you can redeem your goods? Hope yours is still within that period.