Home Equity Loan ????

[possumfat]

Married but filed chapter 7 individually on Oct 5th, 2005 under the old laws. Case has been discharged but not closed due to "preferential payment" made before filing..........have met with trustee and he said come up with some type of offer, so I did almost two months ago, no decision from him yet. My question is can I get an equity loan to payoff wifes credit cards without any type of problem ? House equity was excempt, loan and title are in both names.

[Minnymouth]

If you have been discharged a year and have equity in your home, should be no reason why you can't get an equity loan to pay off cc and whatever the Trustee is after.....

Don't let the Trustee go too long, call him back and ask him what his decision was..... if he accepts your offer or not, if not what will it take to satisfy him?

Been thru this with a Trustee who would not get back with me, caused my home to go on auction block.... Some Trustees will NOT RESPOND to your offer if its not enough, they take other measures.....

Keep us posted.

[BassBoy]

IMO, I wouldn't advise anyone to take on a secured loan to pay-off unsecured debt. After doing this a few times over the years, I realized it got me nowhere, except creating an unecessary lien against my house......and I still lost my house. Equity loans are fine of you choose to make improvements to your home that will add value over the years because you can recover that money, but I don't feel they are the best option to pay off CC debt because that doesn't add value. Even if it's 10K, you still have got to recover that somehow. If you were to sell, you'd lose 10K right off the bat.

Just my opinions here though.

[Minnymouth]

Bassboy, I agree on not using a equity loan just to pay off cc debt...... this would be turning unsecured debt into a secured debt.

I was under the assumption that they also needed funds to pay the Trustee for the preferential payment they made to a creditor!! And that they were trying to combine both into one payment....

Minny

[BassBoy]

Another point I'd like to add is that with a recent BK discharge, most likely, one would be stuck with a sub-prime lender and a high interest rate. PREDATOR! My opinion of these types of lenders gets me all fired up because IMO, they make a loan to someone (most likely in financial distress) based on the equity AND NOT the ability of the borrower to be able to repay. Thus, having alternative motives......HOPING YOU FAIL TO PAY SO THEY CAN TAKE YOUR HOUSE! But again, this is my opinion(s) of these types of lenders.

[Minnymouth]

Yes, the predatory lenders would be quick to accommodate them and would also hope that they would fail on their payments.

I'm glad you also included that in your posting.... good point.

Another option they have to to make arrangements with the Trustee to make payments too him and just keep paying the cc as usual.

[possumfat]

loan would be to pay trustee and get rid of high interest credit card debt..........though its not wise to borrow on home equity its also not to smart to keep paying the interest on the credit card debt that barely goes to reduce the principal amount. At least with a home equity loan the interest is deductible..........................second part of the original question is "can the trustee do anything about the loan since the equity was excempt in the original BK filing ? I was discharged on January 17th, 2006.

[Minnymouth]

I figured that eliminating the high interest rate was part of the problem and getting the money for the Trustee......

Can the Trustee do anything or keep you from getting a loan...... I don't think so..... would be like a consolidation loan using your line of equity credit.
He really doesn't care as long as he gets his $$$$$$.

Yeah, sometimes we do what we have to do to get a situation cleaned up!!!

[FoolAndHisMoney]

IMO, I wouldn't advise anyone to take on a secured loan to pay-off unsecured debt. After doing this a few times over the years, I realized it got me nowhere, except creating an unecessary lien against my house......and I still lost my house. Equity loans are fine of you choose to make improvements to your home that will add value over the years because you can recover that money, but I don't feel they are the best option to pay off CC debt because that doesn't add value. Even if it's 10K, you still have got to recover that somehow. If you were to sell, you'd lose 10K right off the bat.

Just my opinions here though.

Dittos!

[spongenotbob]

Hi Possumfat - looks like we've got competing threads going here ... I think you should decouple the two. Hold off on the HEL, and resolve the trustee issue.

Why do you feel that you need to pay the trustee for a preferential payment? The trustee will sue that creditor to get the preferential payment back from the creditor directly - you are not responsible for that.

Or is there more to the story? =)

[possumfat]

Hi sponge.........the pref. payment was on one of my wife's credit cards and a business she and a partner started..........got some bad advice from lawyer about how soon I could pay things before filing from a 401K i cased in to keep us afloat. I have heard if the trustee go after the pref payment to the credit card they could come back to wife for the difference. I'm just an authorized user on her account.

[spongenotbob]

Hi sponge.........the pref. payment was on one of my wife's credit cards and a business she and a partner started..........got some bad advice from lawyer about how soon I could pay things before filing from a 401K i cased in to keep us afloat. I have heard if the trustee go after the pref payment to the credit card they could come back to wife for the difference. I'm just an authorized user on her account.

Ok ... got it! It was your wife's creditor, not yours. Sounds like the trustee is actually doing you a (small) favor by offering the settlement to you before he sues that creditor - cool. Let us know how it plays out ... at least you know what he's going after now

Regarding the HEL -- Note that the Trustee has not yet completed his part of the investigation into your assets. Do you really want the trustee looking over your shoulder when the future HEL lender orders an appraisal of your home?

Just some friendly thoughts... Best of luck!