I'm going to be filing a ch7 within the next couple months. Should I stop paying on the credit cards now or wait until after I file? Reason I'm asking, if they show as 30 or 60 days late up until I file, will that hurt my credit more after I file the bankruptcy or will it matter.
I kept my bills current up to filing. Can't say it helped me any with my score. It may help if anyone looks at my payment history and sees that their were paid. But the credit reports seem to black out my good credit history on accounts in BK, showing them only as negative accounts.
What I would say is if you have any small accounts, you might pay those off so as not to include them in BK. The more accounts you include in BK, the more it hurts you, it seems. I found this out after the fact. I was advised of this by TransUnion and a FICO rep raised the same issue regarding the number of accounts in BK affecting my score, despite my excellent payment history. Had I known this, I would have paid off two accounts of less than $500 each, leaving me with still more than $30K in cc debt to include in BK. It would have been worth it to pay them off, but I didn't know about it at the time.
As hard as BK was, I'm still glad I did it and wish only I had done it much sooner rather than paying out thousands in cc payments, killing myself doing it, only to ultimately end up in BK. I could have saved myself a lot of money and stress by doing it sooner.
People on these forums say that their scores didn't drop as much and rebounded sooner if they had no negatives before filing. Yes, the IIB is a major derogatory, but if you have a clean record before filing it reduces the number and variety of negatives.
But, if you already have a bunch of lates on your report, a few more before the IIB won't hurt as much, it's the first one that hits the most.
Be careful about saying you've decided to file and then charging on your cards, whether or not you continue to make payments.
Cash is a non-exempt property in bankruptcy court. If you stop paying your bills now, any money you save up will be split amongst your creditors by the court. If you payoff any creditor in full above the minimum payment (paid more to one creditor than another), the court can take that money that you paid to the creditor and split it between all of your creditors equittably.
When I filed BK in 2002, to prevent a repossession on my car prior to bk, I paid the auto loan off about $3000 so I could keep it after the bk was discharged. The value of the car was under the minimum required for equity in a car so I could keep it after bk. The judge ordered that the $3000 be sent to the court (5 months after filing), and it was split between my 11 other creditors I included in bk. Then the company that had my auto loan filed a petition with the court and ended up being able to reposses my car (it was on good terms, they let me drive it for nearly a month and turn it in when I got a new car).
Make sure you know the rules of your state on what property is exempt when you file, and prevent making any large payments to one creditor around 6 months prior to filing or you may have problems.
That's a good point. You can't show preferential treatment in paying your creditors before BK, and if you pay more than about $600 or so to a creditor in period of serveral months (6 months or so, check with your BK attorney on this) you have to justify it and show you weren't giving preferential treatment to the creditor. That's why I said pay off small accounts that don't fall within this stipulation. The less accounts you have in BK the better. Talk to your BK attorney before you pay off any accounts. Your attorney, like mine, might say it won't matter and let them all go to BK. I found that wasn't true in talking to the credit bureaus, and the more accounts you have in BK the worse it is for your credit score, apparently. Of course, I found this out after filing BK.