Using Overdraft pre-BK

[RickInMich]

Hi,

I'm on my way to the credit union to make a deposit so one of my last cc payments clears tomorrow. Anyway, I have $1,000 overdraft protection, and I often go into the overdraft and then pay that off right away as soon as the next check comes in. Is that okay to do? I do not want to in anyway include my overdraft on my BK. Because payday is Friday, and the bulk of my automatic payments (mortgage, 2nd, 2 large ccs) come out at the beginning of the month, I'm close to $1,000 into overdraft. I will pay that Friday when I get paid.

Does this have any ramifications as far as preferential payment?

Rick

[PaKettle]

I have a question about overdraft protection, too, I figured it might be easier just to include it here:

I have an overdraft protection I have never used. If I don't use it at all before I file do I have to include it in the bankruptcy. This may seem like a stupid question but I recall when I filed bankruptcy in the 80's that my attorney said I had to list creditors even if I did not have a balance on them. Is that still true?

If I don't use my overdraft protection up until the time I file, what are the chances my bank will allow me to keep it? (I have no credit cards with this bank and it is not a major bank like Wells Fargo, BofA, WaMu, and so on.)

[lrprn]

I have an overdraft protection I have never used. If I don't use it at all before I file do I have to include it in the bankruptcy. This may seem like a stupid question but I recall when I filed bankruptcy in the 80's that my attorney said I had to list creditors even if I did not have a balance on them. Is that still true?

You do not have to include any debt that is at a zero balance on filing day.

If I don't use my overdraft protection up until the time I file, what are the chances my bank will allow me to keep it? (I have no credit cards with this bank and it is not a major bank like Wells Fargo, BofA, WaMu, and so on.)

Since your bank will be notified about your bankruptcy, I think your chances of keeping an overdraft account are about zero.

Better to get used to living within your means after filing. Unless it's a dire emergency, tapping into overdraft protection means you are still spending more than you make - not a good pattern to start.

[lrprn]

I'm on my way to the credit union to make a deposit so one of my last cc payments clears tomorrow. Anyway, I have $1,000 overdraft protection, and I often go into the overdraft and then pay that off right away as soon as the next check comes in. Is that okay to do?

You're still borrowing Peter to pay Paul. An overdraft protection account is considered non-secured debt. Paying this off within 90 days of filing does open the door to the trustee calling this a preferential payment. It won't effect you, but your bank could be asked to return the money to distribute among all your creditors.

I do not want to in anyway include my overdraft on my BK.

Then you better make sure that your overdraft account is at zero on the day you file. If it isn't, then you have to include it on your creditor's list.

[PaKettle]

You do not have to include any debt that is at a zero balance on filing day.

Since your bank will be notified about your bankruptcy, I think your chances of keeping an overdraft account are about zero.

Better to get used to living within your means after filing. Unless it's a dire emergency, tapping into overdraft protection means you are still spending more than you make - not a good pattern to start.

Thanks for the info. I will keep it at zero so I don't have to file on it, and MAYBE they'll let me keep it... tho' like you say, probably not...

As for living within our means after filing, yes, I plan to learn to do that, am going to start reading a book I bought called "Debt-Proof Living" by Mary Hunt. I have not read it yet so cannot recommend it but it came to me highly recommended.

The fact is I have never used my overdraft protection at this bank, ever, in 2 years. BUT, I would like to have one, just for those rare occasions when I might make a mistake in my checkbook and have a small overdraft, or a check does not get deposited in time, etc.. I have never used any overdraft protection to just "Borrow money" but I have occasionally used one in the past, for honest mistakes with deposits and withdrawals.

[JRScott]

You might want to get Financial Peace by Dave Ramsey too, it is a good book to help you after the bankruptcy I think. (If I'd read it ten years ago maybe I'd never gotten into the situation that needed a bankruptcy myself).

I loved the old Ma and Pa Kettle movies

[PaKettle]

You might want to get Financial Peace by Dave Ramsey too, it is a good book to help you after the bankruptcy I think. (If I'd read it ten years ago maybe I'd never gotten into the situation that needed a bankruptcy myself).

I loved the old Ma and Pa Kettle movies

Thanks, I'll check out the book.

I saw a couple of Ma and Pa movies recently and they are still pretty funny in parts, though very very "corny" for the 21st century! ;-) But I always liked them as a kid.