Does prepaying your insurance or other monthly paid bill reduce your expenses

[shoopy]

If, before filing, you paid off a years worth of car and or house insurance, would that reduce your monthly expenses to the point where the trustee might try to track you into chapter 13. Or, would the expenses still be valid, even though they had been prepaid for the current year?

[AngelinaCat]

You would likely be saving a bit of money by paying the year ahead for both car and home. Monthly payments include 'monthly processing fees' that will typically cost you between $8.00-$15.00 extra. Insurance companies like to have quarterly, biennial, or yearly payments in total. Never mind that you can't pay that large amount at one time. The 'privilege' of reducing the payment to an amount that you can actually afford each month will cost you.

I apologize. I realize that this does not answer your question. I don't know how a trustee would view this. If you are in the habit of making the yearly payment, don't change. We ran into the monthly payment problem, while we were in our active BK, and we had to find affordable homeowner's insurance because our carrier pulled out of the state due to the 2004/5 hurricanes.

Good luck.

[keepmine]

Don't prepay if the goal is to reduce the cash on hand below the exemption amount for your state.

[AngelinaCatHub]

Don't prepay if the goal is to reduce the cash on hand below the exemption amount for your state.

Strongly agree. This could be misconstrued as hiding assets of the estate. Your estates value is depreciated by that amount. 'Hub

[ksgirl38]

Try paying just one month ahead on several of your bills. For example, I filed at the end of July so by the end of July I had most of my August bills paid as well. Are you trying to use up cash or are your monthly expenses not high enough?

[shoopy]

Try paying just one month ahead on several of your bills. For example, I filed at the end of July so by the end of July I had most of my August bills paid as well. Are you trying to use up cash or are your monthly expenses not high enough?

Mostly trying to use up cash, but a bit worried that if I prepay too much, my monthly expenses will go down too much. The one month ahead on several bills idea sounds like it could work. Thank you.

[ksgirl38]

Mostly trying to use up cash, but a bit worried that if I prepay too much, my monthly expenses will go down too much. The one month ahead on several bills idea sounds like it could work. Thank you.

The way I understand it is they are wanting an average of what you pay per month so if you are paying your July phone bill with your August phone bill it's still going to come out the same over an average of 12 months. Your just paying ahead to use up cash. Personally I don't get a discount on my insurance if I pay it all in one lump sum, but my renters insurance policy was small enough that I figured it wouldn't matter if I paid that off. I was also eligible for a phone upgrade on my phone so I bought a new one before I filed. I would have done it anyway, but that helped use up some of my cash. When I was paying my July bills I just tacked on an extra $20 or so to some of them to help out. Not to mention that now is back to school time so if you are buying new clothes or school supplies that might help. Does your car need any service done? Just giving you some suggestions.

[LadyInTheRed]

When I was paying my July bills I just tacked on an extra $20 or so to some of them to help out.

If you have a $20 credit on a bill, that is really an asset that should be reported on your petiton. I am sure that is another one of those assets that often get overlooked. It is impossible for an attorney's questionnaire to be detailed enough to catch every possible asset that a client might not think to mention.

People spending cash to purchase things, as opposed to paying for services that have been provided, should be sure they are not just converting non-exempt cash to another type of non-exempt asset.

[pamkev]

If you have a $20 credit on a bill, that is really an asset that should be reported on your petiton. I am sure that is another one of those assets that often get overlooked. It is impossible for an attorney's questionnaire to be detailed enough to catch every possible asset that a client might not think to mention.

People spending cash to purchase things, as opposed to paying for services that have been provided, should be sure they are not just converting non-exempt cash to another type of non-exempt asset.

Your right never would have thought about that one either, although this is something I used to do, did it due to I don't work in Aug/July at my regular job so I paid ahead so didn't have to worry about those bills for that time period that hasn't happen for a few years and one of another reasons why we filed.

[ksgirl38]

Your right never would have thought about that one either, although this is something I used to do, did it due to I don't work in Aug/July at my regular job so I paid ahead so didn't have to worry about those bills for that time period that hasn't happen for a few years and one of another reasons why we filed.

My mom used to do this all the time when we were growing up. She'd pay an extra $10 or so a month so she'd have extra money in December for Christmas shopping. It's still a bill that's going to have to be paid and it still evens out to the same amount over a year. It's not really any different than paying your car insurance ahead for the year. I would think a trustee would question a large payment to the insurance company more than an extra $20 on your electric bill. I haven't heard of many people having to provide copies of their electric bills either.