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Missed payments prior to filing

Upstatemamaof4
Valued Member

Missed payments prior to filing

Hi all. We're turning in our paperwork to our lawyer on Friday to begin our Chapter 7. We have been current on most of our accounts for the most part. We have quite a few credit accounts and I'm concerned about late payments and remaining on our reports for 7 years. At what point do we stop making the minimum payments? 

I did ask our lawyer but his answer didn't really make sense to me. Conflicted with other information I had read. We can't pay more than a $100 to any one creditor but can't pay over $600 to all creditors. It didn't seem accurate. 

Message 1 of 17
16 REPLIES 16
twono
Frequent Contributor

Re: Missed payments prior to filing


@Upstatemamaof4 wrote:

Hi all. We're turning in our paperwork to our lawyer on Friday to begin our Chapter 7. We have been current on most of our accounts for the most part. We have quite a few credit accounts and I'm concerned about late payments and remaining on our reports for 7 years. At what point do we stop making the minimum payments? 

I did ask our lawyer but his answer didn't really make sense to me. Conflicted with other information I had read. We can't pay more than a $100 to any one creditor but can't pay over $600 to all creditors. It didn't seem accurate. 


That is inaccurate info that your lawyer gave you.  Is it too late to get a new attorney?  That would concern me if they don't know that basic fact.

Message 2 of 17
ballysdad
Contributor

Re: Missed payments prior to filing

I made my minium payments up to the day before I filed. All the debts are listed on the petition and how much you have paid in the last 90 days  of the payments that totalled over $600. I had a few that were just over $600 for the prior 90 days. The trustee can "claw back" certain payments to unsecured creditors and preference payments that are over that amount. It is up to the Trustee to go after those payments.

 

Message 3 of 17
Upstatemamaof4
Valued Member

Re: Missed payments prior to filing

We're turning in paperwork tomorrow, how soon can I expect that he will file? Is it $600 to all creditors that we shouldn't be going over? We have about $750 or so in payments just in one month. Unfortunately, we've already missed a handful. 

Message 4 of 17
Upstatemamaof4
Valued Member

Re: Missed payments prior to filing

Unfortunately it is too late. He had really great reviews though. I'm hoping maybe it was just a misunderstanding on my part. I'll find out tomorrow. 

Message 5 of 17
twono
Frequent Contributor

Re: Missed payments prior to filing


@Upstatemamaof4 wrote:

Unfortunately it is too late. He had really great reviews though. I'm hoping maybe it was just a misunderstanding on my part. I'll find out tomorrow. 


It is $600 to any 1 creditor within 90 days.....You would not get in any 'trouble' so to speak if a filer was to accidentally pay more than the $600 limit to any 1 creditor.

 

I paid $10,000 within 87 days to a creditor.  US Trustee saw that payment on a credit report i had to submit.  My attorney simply filed an addendum to my filing and that was the last i heard about it.

 

The question about having clean reports before filing is a common topic.  I had clean reports prior to filing.  I look at it like this:

 

 

 Filing BK + Clean reports = BAD

 Filing BK + Negative reports = WORSE

Message 6 of 17
jmw1
Regular Contributor

Re: Missed payments prior to filing

If a tradeline is IIB, having a good payment history does you no good because the IIB itself is the kiss of death. You need to PIF the tradeline prior to the bankruptcy to preserve the payment history without the IIB. And if you're really lucky, it will stay open after the BK which is quite valuable in the rebuild. Most of the time, that PIF tradeline will be closed by the creditor even if not notified of the BK.

 

Generally, you start missing minimum payments on purpose on all IIB accounts as soon as you know you will file bankruptcy in the coming weeks or months. Many use the extra minimum payment money to pay for the lawyer upfront so there is no post-petition lawyer debt. I would never go on a payment plan with a ch7 BK lawyer if it can be funded with the old minimum payment money pre-petition.

 

Message 7 of 17
twono
Frequent Contributor

Re: Missed payments prior to filing


@jmw1 wrote:

If a tradeline is IIB, having a good payment history does you no good because the IIB itself is the kiss of death. You need to PIF the tradeline prior to the bankruptcy to preserve the payment history without the IIB. And if you're really lucky, it will stay open after the BK which is quite valuable in the rebuild. Most of the time, that PIF tradeline will be closed by the creditor even if not notified of the BK.

 

 

 


I respectfully disagree.  Credit reports with months or even years worth of late payments, collections, etc....can be looked at as a pattern of financial irresponsibility.   When a loan officer looks at ones' credit file and sees years and years of perfect payment history up to the day the BK was filed, and then they see a re-establishment of credit (to an extent) after BK, they can assume that the person had a sudden, catastrophic financial crisis and not an extended pattern of mismanaged finances, and will believe that the person is back on track financially.  This is especially important when working with a credit union since they are generally more personable than the BTBTF. (banks too big to fail)

 

I was able to get starting limits for unsecured cards 45 -90 days post discharge of $1100 (OLLO),  $2000 (Credit One), and $2500( local CU)......The $1100 OLLO got an auto CLI of $1500 to $2600 within a few months.

 

Of course with all things BK, YRMV.

 

 

Message 8 of 17
2b2rich
Established Contributor

Re: Missed payments prior to filing

With regards to the $600, you should not pay any one creditor more than $600 over the minimum payment within 90 days prior to filing or it could look like you were showing them favor which is not ok. You may keep paying your minimum monthly payments.

 

If at all possible, try to keep your payments current until you file. As someone stated below, many times a potential credit grantor will take a look at your over all report and understandably appreciate a file that has no lates before BK as opposed to a credit file that had lates in its history prior to BK.  Wouldnt you?

 

Another way of looking at it:  Granted the BK will show up on each account and make them derog accounts and your credit score is going to take a dive, but if you start getting lates now, it will drop before you file. where would you rather the BK drop fall from,  the score you have now or a much lower one because of the lates you will receive before filing? 

 

Chapter 7 Discharged & Closed Jan 2020
Message 9 of 17
2b2rich
Established Contributor

Re: Missed payments prior to filing


@jmw1 wrote:

If a tradeline is IIB, having a good payment history does you no good because the IIB itself is the kiss of death. You need to PIF the tradeline prior to the bankruptcy to preserve the payment history without the IIB. And if you're really lucky, it will stay open after the BK which is quite valuable in the rebuild. Most of the time, that PIF tradeline will be closed by the creditor even if not notified of the BK.

 

Generally, you start missing minimum payments on purpose on all IIB accounts as soon as you know you will file bankruptcy in the coming weeks or months. Many use the extra minimum payment money to pay for the lawyer upfront so there is no post-petition lawyer debt. I would never go on a payment plan with a ch7 BK lawyer if it can be funded with the old minimum payment money pre-petition.

 


Paying a tradeline in full within 90 days of filing for bankruptcy could be viewed as showing that creditor favor, so unless they can do this with all of their accounts, then they should not do it, and if they can do it with all of their a counts, then they wouldnt be filing bankruptcy, probably.

 

Also, any Open account with a zero balance has to be claimed in the bankruptcy, and if its on the banruptcy petition, you can be sure the Creditor will cover themselves legally by reporting it as such.  

Chapter 7 Discharged & Closed Jan 2020
Message 10 of 17
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