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New loan before filing Chapter 7

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Anonymous
Not applicable

New loan before filing Chapter 7

I am considering filing Chapter 7 bankruptcy in July 2019. If I were to take out a short term loan from an online lender for emergency expenses and pay it back in full by June 2019, would this be considered a "preferred" or "favored" creditor situation? Would this mean that I would have to take the amount I would borrow from the short term loan and turn it over to the trustee, even though the creditor will be paid in full? I am just confused, because I am unable to borrow any money from relatives.

 

If anybody in the community can explain how this might work, I would really appreciate it!

 

 

Message 1 of 4
3 REPLIES 3
pizza1
Community Leader
Super Contributor

Re: New loan before filing Chapter 7

Yes, it would be considered preferred. Its absolutely frowned on to take out any new credit or loans prior to filing, and "paying back".

That alone could get your BK dismissed quicker than anything, and the dismissed BK stays on your CRA for 10 years). There would be no paying the trustee back, at this point. Remember, you're supposed to be in complete debt, and not have any money at all, and under water.

I would quit paying on everything now and think of filing sooner.

Whats the emergency expenses for?
Message 2 of 4
Anonymous
Not applicable

Re: New loan before filing Chapter 7

This definitely answers my question! I will definitely not be taking out the loan. Thank you!

Message 3 of 4
FireMedic1
Community Leader
Mega Contributor

Re: New loan before filing Chapter 7

Glad you asked before you got the loan. Pizza saved you from a total and complete mess. Most come on after they made a mistake. Never hesitate to ask the folks here anything you want to know before you make any moves. Good Luck on your journey!


Message 4 of 4
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