home equity loan

[glc4122]

yes, i have a question, my car has been put to the graveyards. my question is i have $30,000 plus equity in my home. if i take a loan to purchase another car around $3000.00 will this have any effect when i plan on filing chap 7 in the very near future, approx 3 mo. taking out some of the equity will this constitute bk fraud? any help will be appreciated

thank you

[familyof7]

Just wait at least 3 months before filing and it would probally be to your benefit because with 30,000.00 in equity you are pushing it so if you dispose of some of the equity you have less when you file and it would not even be an issue.

[HHM]

First, do you plan on surrendering the home in BK, and what is your states home equity exemption? Second, what is your state's vehicle exemption? Third, would you be paying cash for the car, or is the $3,000 a down payment, and you would be financing the balance.

If you are planning on keeping the house, then it won't be fraud. There are 2 main types of fraud in BK, for lack of a better term...(1) Asset Fraud (2) Creditor fraud.

Asset Fraud is the type of fraud that gets you in trouble with Trustee and can possible have your BK dismissed, or worse. Asset fraud occurs when you transfer assets out of your estate (i.e. you give your car to your cousin), or otherwise hide assets from the BK court.

Creditor Fraud occurs when you have defrauded your creditors in some way. For example, if you purchase a 50" LCD TV on your Visa, and then declare BK the next month, or you do a balance transfer from your AMEX to your MasterCard, and then file BK the next month. Creditor Fraud is specific to creditors, the trustee is usually not involved. For creditors, all they can do is have their debt declared non-dischargeable...but the rest of your BK is undisturbed.

If you are planning on keeping your house, then what you are proposing is not fraud. It's not creditor fraud because you are going to continue to pay the debt...and its not asset fraud because home equity line of credit is not an asset (note, your home equity is an asset, but the attached line of credit is not an asset).

[glc4122]

home equity

thank you for your posts. i plan on buying a vehicle for $3000.00 or less. I can not swing a car loan too much debt, nobody will finance banks, etc. If i can't get use the equity i won't get to work. And i plan on surrendering the house at chap.7 bankruptcy. so im pretty much in a bad position.

[HHM]

That is tough call...you should probably schedule a few consultations with BK attorneys (consultations are typically free) and ask them your question.

First off...why don't you give us some background on your situation, what type of debts do you have, how much etc.

How much "equity" do you acutally have in your house. Do you have $30K in equity, if so...that is a relatively good chunk of money to be leaving on the table by surrending the house?

Time is on your side...especially if you are going to surrender the house. The home equity line is a secured debt, you can probably get away with taking $3,000 to buy the car, but as the other person suggested, then wait at least 3 months before filing BK.