Paying off minor balances on cc's before filing

[allgoingwron]

Another quick question. We opened 2 new credit cards in the summer (before we decided to go the BK route) one has maybe $80 on it and the other around $60. We plan on filing chapt.7 in Nov. should we pay these credit cards off since they are so new or will it look bad that we paid these but have stopped paying on our other cards?

[AngelinaCatHub]

I don't think with that bitty, bit amount they would even be considered. Do you have any major accounts open? They are new, why did you even open them for such little action? Now, is the the whole months expenditure? In other words did this amount come within the current billing month? Now pay them off, do not use them again, but do not close the accounts. Just list them as zero balance. It is no major payment which would be anything above $600.00. You won't have a problem at all. 'Hub

[UpaCreekinCA]

I'd pay them off and see if they don't get canceled through the Chap 7. If they don't, use them for a gas card of something you need every month to pay it off and help rebuild your credit.

[IBroke]

I'd say pay them off and if you didn't pay them $600 or more over the last 90 days prior to filing and they have a $0 balance the day you file, you shouldn't list them on your petition at all.

[AngelinaCatHub]

I'd say pay them off and if you didn't pay them $600 or more over the last 90 days prior to filing and they have a $0 balance the day you file, you shouldn't list them on your petition at all.

I have to respectfully disagree with not listing them. Even inactive accounts should be listed. This is what we were told to do by our lawyer and if not listed, could be questioned as why. As far as using them after bk, normally, by way of credit companies, they will be closed during the bk. Perhaps reopened after the discharge. But, list them as zero as it is an open and current account. All accounts that you have had within a reasonable time should be listed open or closed. 'Hub

[IBroke]

I have to respectfully disagree with not listing them. Even inactive accounts should be listed. This is what we were told to do by our lawyer and if not listed, could be questioned as why. As far as using them after bk, normally, by way of credit companies, they will be closed during the bk. Perhaps reopened after the discharge. But, list them as zero as it is an open and current account. All accounts that you have had within a reasonable time should be listed open or closed. 'Hub

If questioned, the answer is simply: The account balance was $0 on the day of filing. That's it.

That was a "precautional" recommendation by your lawyer. Legally, it is not required to list these accounts and technically, it would even be incorrect to list them because a $0 balance-account is simply no debt - so what would be the correct schedule on the petition to list them?

[allgoingwron]

Thanks for the replies, I knew about the $600 cap on payments made to creditors but wasn't sure what paying off low balance cc's would mean.

I've been trying to read everything on here so I can be as informed as possible and know what questions to ask our lawyer but I swear it seems the more I learn the more questions I have. I can't wait for this to be over.

[ccsjoe]

Thanks for the replies, I knew about the $600 cap on payments made to creditors but wasn't sure what paying off low balance cc's would mean.

I've been trying to read everything on here so I can be as informed as possible and know what questions to ask our lawyer but I swear it seems the more I learn the more questions I have. I can't wait for this to be over.

1. Odds are they will close your credit regardless of whether you paid them off or not. If you have been reading on here, you know you have a less than 1% survivability ratio. With those odds, why throw money at them?

2. If they are $0 balance, they do not need to be listed as they are not current creditors. Sorry Hub, my attorney's instructions were these. So we did not list three 0 balance credit accounts. One already closed. The other two are not credit cards, but store cards, and are still open, but likely won't be for long.

[IBroke]

If they are $0 balance, they do not need to be listed as they are not current creditors. Sorry Hub, my attorney's instructions were these. So we did not list three 0 balance credit accounts. One already closed. The other two are not credit cards, but store cards, and are still open, but likely won't be for long.

Yep, and as I said - listing $0 balance-accounts wouldn't be "correct". If I'm not mistaken, CCs would be listed under Schedule F - and Schedule F reads:

"Creditors holding unsecured nonpriority claims"

State the name, mailing address, including zip code, and last 4 digits of any account number, of all entities holding unsecured claims without priority against the debtor or the property of the debtor, as of the date of filing of the petition.

So the answer is already on the petition...

[keptdigging]

Lawyers hedge risks. The theory behind listing a $0 balance card is: (1) it's harmless; (2) what if the debtor is mistaken and there really is a balance? If included in the filing, no doubt about a discharge.

Personally I had a secured CC that I was diligent in making sure I could pay off without going over $600, and brought to a zero balance. Obviously not a secret from my lawyer because we listed the security deposit as an asset. Didn't list the card.

Now I am fully prepared for them to close it, and, in fact, the card agreement says they will. However it is 45 days from filing and they haven't closed it yet. And I've tested by using it a bit.

I didn't have any zero balance regular cards by the time of filing (they'd all been closed before hand based on my deteriorated credit report,) so I can't provide a data point for them.

Had I had a card with balances as small as the ones the OP listed, I too would have just paid them off, if only to simplify the filing a bit.

[allgoingwron]

1. Odds are they will close your credit regardless of whether you paid them off or not. If you have been reading on here, you know you have a less than 1% survivability ratio. With those odds, why throw money at them?

2. If they are $0 balance, they do not need to be listed as they are not current creditors. Sorry Hub, my attorney's instructions were these. So we did not list three 0 balance credit accounts. One already closed. The other two are not credit cards, but store cards, and are still open, but likely won't be for long.

I'm not worried about keeping them, its just that we got them and put minor charges on them right before we decided to look into BK so the right thing seemed like paying them off especially since they are just piddly amounts.

[ccsjoe]

I'm not worried about keeping them, its just that we got them and put minor charges on them right before we decided to look into BK so the right thing seemed like paying them off especially since they are just piddly amounts.

As long as you're not paying them over 600 back you should be fine. I personally stopped using our credit cards in 08/02/10, last payments were made in July, filing date 8/27. So we did use them up to within a month of filing, however, like you, all chages were small and in our case necessary living expenses. Did not have any issues so far.

[allgoingwron]

That is good to know. I guess you could say we were in our death throes, we had maxed out all our other cards and had nothing left to draw on for the overages so we opened them up to have that emergency money and then realized there is no way we can keep living like this.

[tay666]

Had I had a card with balances as small as the ones the OP listed, I too would have just paid them off, if only to simplify the filing a bit.

That is what I was thinking also.
One less thing to list on the paperwork.
One less thing to have to fight with the credit bureaus.
One less thing that could be sold off as zombie debt and become a nusance somewhere down the line.

[CreditCretin]

We had a couple of cards with very small balances that I paid off prior to our filing, thinking they may survive the bankruptcy. My attorney told me that it was up to me, the balances were so low around 80.00 so it wouldn't red flag anything, but he also said I didn't have to and not to count on the cards surviving. Others here told me that as well. I should have listened. Not even a week after we filed, the banks closed them. It was OK, as I thought it was worth the expense to try, but it was fruitless. Also a few of our cards we haven't used in years, that had no balances on, were also closed.