Re: when to stop paying on stuff before filing ch7
10-21-2011 05:23 PM
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.
Starting Score 5/1/2002: 553
Current Score 5/30/2012: 785 (EQ FICO)
Current Score 10/2/2012: 803 (TU FICO)
Goal Score: 800
Take the FICO Fitness Challenge