Okay to use home equity line of credit?

[nervous1]

I know I can't (shouldn't) use my cc's after I decide to file BK, but is it okay to use the HELOC?

[keepmine]

I gotta say, if you still have to use credit post bk then, you got problems bk can't fix. Don't file until you have a clear plan to support yourself post bk without access to credit.

Your HELOC lender is gonna be like your credit card issuers. They'll subscribe to bk notification services and cancel that line of credit the moment they discover you filed.
In addition, once you file all your assets become property of the bk estate until discharged. You don't need to run up debt against an asset that for a short period of time is controlled by the trustee.

[nervous1]

I gotta say, if you still have to use credit post bk then, you got problems bk can't fix. Don't file until you have a clear plan to support yourself post bk without access to credit.

Your HELOC lender is gonna be like your credit card issuers. They'll subscribe to bk notification services and cancel that line of credit the moment they discover you filed.
In addition, once you file all your assets become property of the bk estate until discharged. You don't need to run up debt against an asset that for a short period of time is controlled by the trustee.

I figured someone would say that - and I don't blame you - but I have a reason for asking that would take me forever to explain...

As far as the "problems bk can't fix." We' will have an add'l $800 a month back into the mix by stopping payments to the cc's. (JUST made the decision to stop, most aren't even late yet.) Leaning heavily towards including the house in the bk and moving to our little bitty lake cabin - no mortgage and much lower utility bills.

[helpmeout]

I figured someone would say that - and I don't blame you - but I have a reason for asking that would take me forever to explain...

As far as the "problems bk can't fix." We' will have an add'l $800 a month back into the mix by stopping payments to the cc's. (JUST made the decision to stop, most aren't even late yet.) Leaning heavily towards including the house in the bk and moving to our little bitty lake cabin - no mortgage and much lower utility bills.

And an asset. One that just might be sold by the Trustee. Especially since it isn't your homestead. I would consult with an attorney about your plans for the asset that is free and clear of any debt and whether or not you can exempt it. And if you want to use the homestead exemption, you need to find out how long you have to live in it before it is considered your homestead.

[justbroke]

Leaning heavily towards including the house in the bk and moving to our little bitty lake cabin - no mortgage and much lower utility bills.

You should be speaking with an asset protection or bankruptcy attorney. That little bitty lake cabin is probably considered a second home and is more than likely NOT protected by the bankruptcy. While this BKforum has very knowledgeable members and is a great resource, you really need to be seeking the expert advice of an attorney that specializes in asset protection.

[pcbuilder481]

why do people think its okay to use credit while filling bankruptcy, this is the 3rd or 4th post in the past few days that someone is asking about using credit in bk? You are filling bk because you cant pay for the credit you have so NO its not okay to use it.

[nervous1]

According to the attorney that I met with a couple of weeks ago, since the cabin is not in my name - just my spouse's, who is not filing - it is not a factor in my bankruptcy.

I do plan on meeting with at least 2 other BK attorneys, but does anyone have any reason to think Attorney #1 gave me false information?

edited to add:

GA is not a community property state. (you guys have got me really nervous now....)

[justbroke]

According to the attorney that I met with a couple of weeks ago, since the cabin is not in my name - just my spouse's, who is not filing - it is not a factor in my bankruptcy.

This is information not previously provided. Previously you wrote "our cabin" indicating joint ownership. So long as you're not in a community property State, this is okay. Since Georgia is not a community property State, this should be fine. However, did the spouse own this cabin before your were married? Did it come into the spouse's hands during the marriage solely by using their own, and not marital property?

I don't think it will rise to that level of inquiry anyhow. However, if you have joint debts that you are personally discharging, you may encumber your spouse and they may feel the wrath of the creditors.

I do plan on meeting with at least 2 other BK attorneys, but does anyone have any reason to think Attorney #1 gave me false information?

It shouldn't be, unless it was purchased with marital property and you put it in the spouse's name solely to hinder, delay or defraud creditors. While I can't tell you that the Trustee will look deeply into the ownership of that property, you may have a risk there. I would consult with a few more attorneys. Again, I don't see it as a particular issue if all the title is clean (no quit claims and such).

[newbie2]

I know I can't (shouldn't) use my cc's after I decide to file BK, but is it okay to use the HELOC?

It's the same thing. Credit is credit. Since you are giving the home up you clearly have no intention of paying this debt post-bankruptcy.

[helpmeout]

According to the attorney that I met with a couple of weeks ago, since the cabin is not in my name - just my spouse's, who is not filing - it is not a factor in my bankruptcy.

I do plan on meeting with at least 2 other BK attorneys, but does anyone have any reason to think Attorney #1 gave me false information?

edited to add:

GA is not a community property state. (you guys have got me really nervous now....)

Was it purchased during the marriage? If I were a Trustee, that would be my first question. Because even though your name isn't on the deed, should you and your spouse divorce, the cabin would be considered joint if it were purchased during the marriage.

[AngelinaCatHub]

why do people think its okay to use credit while filling bankruptcy, this is the 3rd or 4th post in the past few days that someone is asking about using credit in bk? You are filling bk because you cant pay for the credit you have so NO its not okay to use it.

I agree. The OP feels he has a special reason to use HELOC to lengthy to explain. There IS NO reason to use another person's money while contemplating not paying them. This would be fraud right out. Or constructive bankruptcy.

In FL you must live in the same residence for six months to homestead it. Also the issue as to the length of time the cabin was in the spouses name is most important. Particularly before or during the marriage. $800 a month is not much money but will help, but fishing in that lake for food may be the rule, not the hobby.

I wish the OP well, and they need the new start, but they also need to practice post bk life now or they will fail and, talk about stress, getting sued and no bk for 8 years will cause much. 'Hub

[nervous1]

Sorry I even brought up the topic. As far as the cabin, my DH inherited it from his dad, it has never been in my name, no quit claims, etc.

[AngelinaCatHub]

Sorry I even brought up the topic. As far as the cabin, my DH inherited it from his dad, it has never been in my name, no quit claims, etc.

That is good. Please don't take anything personally. We are here to give advice not to criticize a person. What you would do could cause you a future problem. My DW and I were the poster children for bad mistakes through ignorance. Who at our age and our past wealth (10 mil) would ever think they would do a bk? So without knowledge we did everything wrong and paid dearly for it. We don't want you or anyone else to do the things we now know better about not doing.

The school of hard knocks is painfully educational. 'Hub

[nervous1]

Thanks Angelina. I know I came across as defensive, but this whole BK thing is so new to me. Two weeks ago, it hadn't even crossed my mind that I would be considering it.

I'm also really mad. We should NOT be in this position. We never had 10 mil., but my DH rec'd an inheritance in 2004 that, had we planned more carefully, would have provided for us the rest of our lives. My excuse is that I was taking care of my mom (she passed away last year after battling cancer) and, frankly, it never crossed my mind that anyone could blow an account down to zero. (Yes, I'm a little bitter ;)). I certainly did my share of foolish spending (our attic is filled with toys, books, cars purchased for our sons), but mine was more on a small scale. In my husband's defense, he was genuinely trying to start a business and believed the wrong people. He's also extremely generous. (Where are all those people he helped now?)

I've NEVER been late on a cc payment, mortgage, etc. Purchased a TH before marriage, had a nice retirement fund, etc.

Now, here we sit, facing BK, and a trip to McDonald's has to be carefully weighed.

[justbroke]

Sorry I even brought up the topic. As far as the cabin, my DH inherited it from his dad, it has never been in my name, no quit claims, etc.

Excellent, then the title will be clean! I was just warning you that the Trustee will probably poke around at that juicy asset. My post is not meant to discourage you, but to tell you what is likely to be the scenario when it comes to your BK.

Given the additional information, I still don't see any indefensible issues.