Will it hurt me to pay off some smaller credit cards prior to filing?

[deedee642]

I have some credit cards with very small balances. Will it hurt me if I pay off the credit cards prior to filing?
Thanks,
Dee

[tobee43]

no, it will not hurt you...just your pocket book.

we paid ALL our cc's up until we absolutely had to stop...this was a personal choice....our atty advised against it.

to this day, i believe it was the right thing to do...first...because it held off all the collection crap...
secondly..it didn't give opportunity for our credit to drop really low because we were timely with all of our payment up until the actual filing....that may be the reason that 8 weeks later our credit scores are 690 and 685.....i'm not certain...i'm just guessing on it since we did not have a long history of delinquent accounts being reported.

however, our reasoning was specific. and, if you have no special reason....i would just keep your money and list them in the bk. it's a personal choice.

[deedee642]

Tobee-
This potential BK is happening quickly and I haven't been planning for it. So, I haven't been doing all of the things 90 days out that I am now learning about. For example I just opened a Kohls Dept. Store card, so I would like to pay that off. Hoiping it won't look bad that I opened a new accont, because there will be no balance. I am of the same mindset as you (like you against my attorney saying you can stop paying). Maybe I can help with the credit score if I do not have a lot of delinquents. However, I am worried about some of the posts about preferrential treatment. Like that some of the other creditors might come back and say why did you pay them and not us. So I am not sure what to do.
Dee

[sheilaE]

We didn't pay our small balance and 6 months later, all (3) the $200.00 and lower balances were wrote off. I guess they figure too costly to keep trying to collect on them. I wouldn't bother paying them if you're planning on filing anyway. In the end-it's not going to make any difference.

[tobee43]

Tobee-
This potential BK is happening quickly and I haven't been planning for it. So, I haven't been doing all of the things 90 days out that I am now learning about. For example I just opened a Kohls Dept. Store card, so I would like to pay that off. Hoiping it won't look bad that I opened a new accont, because there will be no balance. I am of the same mindset as you (like you against my attorney saying you can stop paying). Maybe I can help with the credit score if I do not have a lot of delinquents. However, I am worried about some of the posts about preferrential treatment. Like that some of the other creditors might come back and say why did you pay them and not us. So I am not sure what to do.
Dee

dee...if, from what i understand a creditor is found to have had preferential treatment....the trustee would just ask them for the money back.

we paid, however we did not charge for at least one year prior to the filing...whereas you stating your just opened an account....so, i now understand what your saying.

i remember also arguing with the atty where they wanted to LIST every single account good and or not good on our credit report. i simply said NO.....so i hear you...if you pay kohls off, and don't list them on the petition...no harm or foul???

someone...chime in please....LOL!!! because i would pay and then file or pay and wait depending on what the atty says.

[lrprn]

If you pay one of your non-secured creditors more than $600 total during the 90 days before filing without paying all of them some similar amount, your trustee can call that a preferential payment. It doesn't impact you, but the creditor will be forced to return whatever you paid them so it can be equally distributed to all your unsecured creditors that file claims.

If the creditor has to give the amount you pay them back to the trustee, then you didn't make the payment that paid off the cc and your credit report will reflect that.

This is why your lawyer is advising you to stop making all non-secured cc and other payments now that you are certain that you are going to file. It truly is a waste of money better spent getting into the best shape possible to file. Set up appointments for the family with your doctor and dentist, have your cars repaired, buy necessary clothes to replace those that are worn out, etc.

Since Ch 13s are much longer than Ch 7s, our credit tends to repair itself nicely over time. The dings you may take now for not paying are much reduced over time as you continue to pay everything else on time for the years of your plan, and you can use the cash for better purposes right now that directly benefit your family.

[scorpion35]

if u pay the cards with small balances and don;t include them, theres a good chance they will survive

[lrprn]

if u pay the cards with small balances and don;t include them, theres a good chance they will survive

I hate to burst the bubble here, but if the cc's with no balances are major credit cards (MasterCard, Visa, Discovery, AmEx, etc), the chances for any of them to remain active after filing bk is very small.

The major cc companies notify each other about filings through a common database. Even with no balance, the major cc companies will see you filed and cancel your card anyway.

Take a close look at the original cc agreements you signed to get the cards. They almost all contain language in that fine print that states if you file bk, they can cancel the card with no notice and no other reason required. And they do just that.

Sometimes local cc cards, store cards, and gas cards will survive filing bk and remain active - that's about it. It's not consistent from area to area of the country.

If you are counting on a zero balance major cc to be your emergency backup of $$ through your Ch 13, don't. Start making Plan B because the chances are very high (like 99%) that your major cards and most of the other cc's will be going bye-bye within days of filing.

[scorpion35]

i meant store credit cards

[sharina]

Yep, save your money. You will not be reaping any benefits by paying if you know yor are filing; NONE.

[deedee642]

It isn't so much that I want to keep them open. My atty. is saying that I can't have open lines of credit. I was thinking that it would be less 30,60, or 90 days late on my credit report. But I guess with the BK, I don't know some are saying it will help others arre saying it won't. This is so much more difficult than I thought. The amounts would be under 600.00.
Thanks,
Dee

[tobee43]

if u pay the cards with small balances and don;t include them, theres a good chance they will survive

they will not...promise....after 1 week after the bk...zero balance or not they will be gone in a ny minutes.

we have many more cc's with ZERO balances not even listed that were closed by the issuing party just because of the bankruptcy. didn't matter that some we had for over 25 years and never late.

i have heard of one sneaking by...but highly rare. they just snap off everything.

[tobee43]

It isn't so much that I want to keep them open. My atty. is saying that I can't have open lines of credit. I was thinking that it would be less 30,60, or 90 days late on my credit report. But I guess with the BK, I don't know some are saying it will help others arre saying it won't. This is so much more difficult than I thought. The amounts would be under 600.00.
Thanks,
Dee

i suppose you need to ask yourself really why do you what to pay them. if it's because of not charging within the 90 day period...i may opt to just wait out the time period as opposed to paying.

it's really not that difficult if you model your guidelines under the criteria of when it's "safe" in your district to file.

[sharina]

Yep, why do you want to pay them? Do what your attorney advises. No need to pay anything due to trying to make your credit report look better as once the 13 filing is on there, nothing else really matters. Believe me, I am paying 100% back and no-one cares, we filed so they will not even look at us. Credit has changed alot in the last couple of yrs and people who filed chapter 13 and who are now out of it were looking at a whole different game than those of us who filed in the last few yrs. The credit markets are still very tight, period. So why pay something that will not benefit you in the end. You will have the protection of the automatic stay and I am guessing your attorney will advise not to pay.