Questions regarding Chapter 7

[Anonymous]

Asking for a friend as I haven’t been able to find much information on the correct way to go about it.

Would it be best to continue to pay the creditors until discharge so there is no negative tradelines if they have the means to keep with the minimum payments or does it not matter at this point. She is not past due on an anything including the accounts she’ll IIB. What would be the best approach to rebuild quicker and more successfully?

[Birdie82]

The day I decided to file I was current on all of my payments. I filed on May 21, 3 weeks prior I used the money that I wasn’t paying the creditors to retain my lawyer. Her credit is going to take a beat down from filing BK alone . She can rebuild after because some people scores increase because the debts owed decrease.

[FireMedic1]

Its a catch 22 situation. Its bad enough to file BK and have that hit your scores. Upside is after DC you may have a score rise due to no more debt. It sounds great to pay right before the file date so no lates appear and add to the damage. Lates are for 7 yrs. BK for 10. It would be advisable to talk to the attorney and ask about it. Each BK is like a FICO score. No BK case matches.

If it was me and I had 3 or 4 cards with a min payment each month of 50-75 bucks a month. I'd pay it right before filing so no lates would appear. I believe its $200 a month 3 months before file date. No more than $600 to one creditor.  But then the preferential thing comes into play and its not looked to good upon by the courts. Have your friend talk to the lawyer. But lawyers arent FICO experts either. Good Luck!

[DaveInAZ]

Would it be best to continue to pay the creditors until discharge so there is no negative tradelines

- No! Once they file all debt is under the jurisdiction of the BK court and creditors are strictly prohibited from making any attempt to collect any of the debt. The won't accept her payments if she tried to make them as that could be considered attempting to collect a debt. Late payments before filing can be reported, but once she files they can't report any late payments after the filing date.

[FireMedic1]

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@DaveInAZ wrote:

Would it be best to continue to pay the creditors until discharge so there is no negative tradelines

- No! Once they file all debt is under the jurisdiction of the BK court and creditors are strictly prohibited from making any attempt to collect any of the debt. The won't accept her payments if she tried to make them as that could be considered attempting to collect a debt. Late payments before filing can be reported, but once she files they can't report any late payments after the filing date.

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Good catch Dave. I misread that part. I was thinking up to file date. Not after MOC.

[Anonymous]

My apologies I got my terminology all wrong. It was to the file date. She had a conversation with an attorney and he advised her to stop paying. However she is waiting to file until 90 days as she had some large purchases and is worried about that. The attorney said to stop paying. My thought process is that if she stops paying and has to wait now she has a 30,60,90 day late. Plus the BK. I know her score will take a beating regardless but I’m trying to give her a way forward and help her get through this process a little less beat up I guess.

[FireMedic1]

Thats better. I just dont care for a double whammy score hit. Why have lates and a BK.  Either way you cant afford to pay it all off thats why your filing. If its a few bucks make the last min. payment the month before the papers are signed for the filing. Then when the CCC's get the notice of filing. No lates. Just the BK. I'll get flak for saying this. The cards will be closed down anyway. But at least there wont be lates on them. Its just my opinion. Others will have different ones. Either way good luck and hope you have a smooth process up to DC!