Consolidation Loan A Problem?
I am thinking of filing a Chapter 7 in New York. About 8 months ago I took out a personal unsecured consolidation loan to pay off some bills. The loan was for $25,000. One of the attorneys I consulted stated that this may be a problem because it is fairly new and for a large amount. I do not own a home or any other assets. Anyone know why this would be a problem?
Answer:
It could be a problem because you will be filing for bankruptcy so soon after. Unless there has been a significant unforeseen change in your financial situation, such as job loss, illness, separation, etc., the lender could argue that you took out the loan with the expectation of filing for bankruptcy or without the ability to pay it back. This could result in the loan being held nondischargeable.
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