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chap 7 question

POINTBLANK
New Member

chap 7 question

I'm filing chap 7 shortly and I have two small cards with a total balance of 1k, should I pay them off and not include them in the Bk.  I have 2 years of good history with the 2 cards and I'm curios if this will help me recover quicker after the Bk

Message 1 of 6
5 REPLIES 5
redneck18
Contributor

Re: chap 7 question

This could be considered preferential treatment and could cause issue. I highly recommend discussing this with your attorney before doing so.
Message 2 of 6
nolamike
Frequent Contributor

Re: chap 7 question

pay your normal amount if you are not including them in the BK. avoids all problems.

 

during the BK process pay them as normal, your lawyer will tell you the same.

 

being excluded from the BK means they are due as agreed and you want to keep them happy and avoid any possible conflicts from other creditors.

 

if by balance you mean amount owed, that would mean their total credit value is over the 1K owed. IF that is correct then post-ch7 you should be in good shape to start over.

 

 

Starting Score: EQ 628 | TU 643 | EXP 618
Fico 8 12/22/16: EQ 658 | TU 682 | EXP 721
Next Goal:        700's across the board
Credit Karma:   EQ 554 | TU 551
CK 12/22/2016: EQ 637 | TU 637
Message 3 of 6
despritfreya
Frequent Contributor

Re: chap 7 question


nolamike wrote: pay your normal amount if you are not including them in the BK. avoids all problems. during the BK process pay them as normal, your lawyer will tell you the same.  being excluded from the BK means they are due as agreed and you want to keep them happy and avoid any possible conflicts from other creditors. if by balance you mean amount owed, that would mean their total credit value is over the 1K owed. IF that is correct then post-ch7 you should be in good shape to start over.

 


This is deeply concerning.  You DO  NOT exclude any creditor.  You include every creditor you have - period!  If you wish to attempt to reaffirm a debt you do so officially.  No  attorney will advise you to exclude a creditor.  No seasoned bk attorney will suggest or recommend that you continue to pay/reaffirm just because you want to "keep" the credit card.  Further it is highly unlikely that a judge will allow you to reaffirm a credit card.  Your wish to stay in "good standing" is not justification to allow you the chance to screw up the "fresh start" a Chapter 7 is meant to give you - hence the reason your judge will most likely say "no" to reaffirming a credit card - even one with a low balance. 

 

As to paying off the creditor prior to filing. . . payment of $600 or more to any one (non insider) unsecured creditor within the 90 days prior to filing can be deemed a preference and recoverable by the Chapter 7 Trustee.  

 

If you pay off the credit card prior to filing and owe $0 when you file, the creditor need not be listed on Schedule F.  If, by paying the credit card off, you pay that creditor $600 or more in the 90 days prior to filing you need to list the payments in the Statement of Financial Affairs and the Trustee can recover the preference.  Regardless of what you pay, whether or not the creditor will allow you to keep the card once the creditor learns of the bk is anyone's guess.  

 

Des.

Message 4 of 6
POINTBLANK
New Member

Re: chap 7 question

Okay, thank you guys
Message 5 of 6
nolamike
Frequent Contributor

Re: chap 7 question

sorry I did not use the "officially exempt" a creditor your highness. Which by the way is a term NOT found in bankruptcy law.

 

You affirm a debt in the paperwork leading up the case. You say Hey I'm okay with this debt I don't want to bankrupt on them.

 

you don't stop paying the minimums on the debt you are affirming unless your lawyers an idiot or thinks they are pulling a fast one.

 

not paying any bill, lights, water, insurance, etc only damages you further and bankruptcy court is about abating damage not causing it.

 

you don't go pay off a lump sum leading up to the court case, you keep paying as you have  been, two different things. Once the judge accepts your case, they will tell you the parameters of who to pay, what, when and where for the duration of the proceedings.

 

Until that moment in the court you pay has you had been. If i had thirteen creditors including rent, phone, lights, and 1 credit card in good standing and the rest in collections, I keep paying all those I have been paying if I am affirming that debt and excluding from the bankcruptcy. You do this right up until the day in court the judge tells you different.

 

IF your BK lawyer tells you to stop paying, and you do, that is on the lawyer. Just get it in writing. IF the judge does not like it, you may have a malpractice case against the lawyer.

 

 

Starting Score: EQ 628 | TU 643 | EXP 618
Fico 8 12/22/16: EQ 658 | TU 682 | EXP 721
Next Goal:        700's across the board
Credit Karma:   EQ 554 | TU 551
CK 12/22/2016: EQ 637 | TU 637
Message 6 of 6
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