Do debts need to be in arrears before declaring Ch 7?

[mmace1]

My mother has made minimum payments forever, and never missed a payment. However she has no chance to pay off her debt (around $40,000 in debt, on an income of below $20,000/year), and will shortly have to start paying for a place to live (whereas before she lived for free). She won't be able to manage this I know. Does she need to stop paying her minimum payments first, and then declare Ch. 7? Or can she go straight into Ch. 7 with her clean credit history? Thanks,

[JollyGG]

We never had a late payment until the month we declared bankruptcy. You do not have to be behind.
Many people are behind when they file. They stop paying their unsecured debt when they decide to file and then wait for major purchases or cash advances to age so there is less chance of objection, or they spent time learning to live without credit cards so they know that they can live on what they make. Others struggle for months or years trying to stay ahead, but don't manage it before they figure out they need to file.
While many people are behind on their payments when they file it is not a requirement. There are plently of people here who were never late on the day they filed.

[SinkingFast]

You can file and be current on your payments. But there's a couple of things your Mom will need to consider.

Her monthly expenses. Mom's been living for free, and now, suddenly has to pay for many costs to live. Rent, utilities, phone, and such. She wouldn't even begin to know what to tell an attny her monthly costs are. How much for rent? Will she have to pay water? How much for electric/gas? Trash? Phone? Unless she's done it for a few months first.

Then there's the Preferential Payments to consider. If Mom pays her Creditors $600 or more within 90 days prior to filing, the Trustee can go back to the Creditors for the money. If the Trustee does that, it could slow Mom's case down immensely. The Trustee will collect the funds, notify the Creditors there's money available, wait to hear from the Creditors. Then distribute the monies, audit the case, produce a final statement of who got paid what, before Mom's case could close.

Preferential payments doesn't sound like anything major. BUT,....... If Mom is older, maybe has a health condition you need to worry about, time might not be Mom's friend. Having a hang-up in closing Mom's case could lead to other problems if something were to happen.

[CindyLou]

she should keep paying her minimums until she consults an attorney. Once she does that and makes the decision to file she can stop paying and save that money to pay the attorney.

[HOMEBODY]

If she has been paying her bills on time..she probably has a good credit score..I thought that if your credit score was high and then you filed BK then you wouldnt be hit so hard on the score. Anyway, maybe I better ask this question on the forum to see what the answer is.

[backtoschool]

If she has been paying her bills on time..she probably has a good credit score..I thought that if your credit score was high and then you filed BK then you wouldnt be hit so hard on the score. Anyway, maybe I better ask this question on the forum to see what the answer is.

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