Repay title loan after filing?

[Movingon2010]

This question is not for me but a friend who is also considering bk 7.

They have a title Loan with Cash point title loans. They may be forced to file soon.

The only hiccup they have is that Cashpoint has a lien on the car. They are wondering can they file and then pay the lien off before the 341 or will that be considered preferential payment? They just want to make sure they dont lose the car due to a lien. They can file the car under exemptions its worth about $4000 the title loan they owe $1500 left on it.

[newbie2]

It's a secured loan, so they should just keep making the normal payments. If they want to pay it off, they can do so after the discharge. Preferential payments normally apply to only unsecured debt or debt to insiders, not secured loans. The trustee may want to know why $4000 in cash was used to pay off a secured debt, so I wouldn't risk paying it off prior to filing.

[Movingon2010]

If they paid during the bankruptcy the balance is 1500 and thats what they would pay. Here is the kicker. The original loan was for $1000. They have been paying $235 a month since January on this loan. So they are paying paying triple back on a loan. So they borrowed $1000 they owed $3000 back.

When I found this out I was livid! But they were over a barrell at the time and they were DESPERATE. I find it sad. :-(

[Freddy03]

If they paid during the bankruptcy the balance is 1500 and thats what they would pay. Here is the kicker. The original loan was for $1000. They have been paying $235 a month since January on this loan. So they are paying paying triple back on a loan. So they borrowed $1000 they owed $3000 back.

When I found this out I was livid! But they were over a barrell at the time and they were DESPERATE. I find it sad. :-(

Wow I have a title loan for $1000 and my total payback is $1416. I have set monthly payments of $118 for 12 months.

[IamOld]

Freddy that's not too bad...as I recall, the previous governor and your atty gen have cracked down pretty hard on payday loans and title loans...so that's why maybe you're deal is relatively decent!!!

[frogger]

They are wondering can they file and then pay the lien off before the 341 or will that be considered preferential payment?

This is more than one question, so let's look at them:

Preferential payment - done before filing for bankruptcy.

Can they file and pay off before the 341? That would be a no-no. They must list the debt on their petition. If they want the vehicle, then file with the vehicle listed, and it can be paid out with the bk process.