Is there any advantage to being current?

[dtimo]

my wife and I are going to file chapter 7. To date we are current on all of our accounts and have never been late on a payment.
Is there any advantage to pushing hard to file before we start defaulting?
If there is, is there any advantage to filing before going late or filing , say, 25 days late?

[wonderingrov]

The only advantage I personally can see is that your credit score may be a little higher going into bankruptcy, so the credit score hit post bankruptcy MAY not be quite as bad. To me, personally, that particular 'benefit' wouldn't really make that much of a difference, but that's just my 2 cents worth.

On the other hand, if you go ahead and stop paying on the unsecured credit, that will mean more funds for you going into bankruptcy. For me, having more cash available was a higher priority - particularly since my lawyer was able to exempt that amount in my case.

[justbroke]

If you're able to pay all your bills and keep them current, the real question is... why are you filing? If you're depleting savings and your retirement accounts... STOP PAYING your bills! You are just hurting yourself.

You should not be worried about the recovery of your credit, but should be more concerned with stabilizing your financial condition. Stop paying credit cards because it's wasted money! If they have a balance on them, they will still show as Included In Bankruptcy (IIB) anyhow, affecting your credit. Additional, the Chapter 7 will affect your credit as well.

How is your mortgage?

[ccsjoe]

I agree with jb. I was doing the same thing. Only reason was hoping credit score would be higher and collection calls wouldn't start. Well, I stopped paying end of July. Screw credit score right now. Collection calls only from 1 creditor and very pleasant inhouse collection. No harassing, gave them attorney name & number, approximate date of filing, and that was all.

[tcreegan]

no advantage

Hi dtimo,

Being current counts for nothing in a BK. BK is a business decision, no brownie points for character, virtue, or good intentions. I have seen a number of posts from people so conditioned to making payments on time that they actually have trouble stopping payments. But most folks get over that pretty quick. The wisdom of the forum is stop debt payments immediately and use the $$ for rebuilding your future.

The credit reporting issue is largely moot. Staying current pre-BK or, worse, reaffirming a loan, might help a little....but the BK itself is the 800lb gorilla in the room no one is talking about.

The best thing for your credit score is to contact the big three reporting agencies after your case closes, get a copy of your credit history, and make sure all accts in the BK have a zero balance and are noted as IIB (included in BK) and not as charged off, closed, or something else.

Then start re-building credit, lots of good advice in the forum here, lots of self-help books, lots of good info online.

Good luck with your BK,

Tom in Colo

[dtimo]

That's the advice I needed---preserve the minimal assets do have to live on through the process.

Thanks to all