Forbearance & Chapter 7

[Gurbet]

Good day. I know I will be filing for bankruptcy. However, before I proceed with it, need to clarify something. I was furloughed for 4 months. Asked all the creditors for help and deferred payments. However, I am now laid off and won't be able to make my payments, hence the reason for chapter 7. Now, I have forbearance help on my mortgage for the last 3 months. My question is, if I were to pay the forbearance in lump sum, plus the present months mortgage, would that be hold against me by the other creditors (CCs + personal loan) when I file? Thank you all in advance.

[justbroke]

You mean to pay the forbearance on the mortgage? Paying secured debt is not a preference so it's generally allowed.

Are you planning to file with an attorney? Since you have real estate, Florida exemptions are precarious. I don't know if you have any equity in the home, but that could affect what you can protect in a Chapter 7 bankruptcy. I would recommend filing with an attorney if you have a home, especially if there is equity, in Florida.

[Gurbet]

Thank you for your reply. Yes I will have to go with an attorney and yes I was planning on paying the forbearance on the mortgage rather than the credit cards and the personal loan.

[flashoflight]

Paying the secured debt's regular monthly payments or back payments is not a preference like the forbearance payments. Paying 5 years worth of mortgage payments in advance is most likely a preference designed to hinder and delay your poor unsecured creditors. Your plan to pay the mortgage is fine.

There is also the general advice to maybe not file bankruptcy until the income situation has stabilized. You only get one BK reset in 8 years and you may need another reset if you're still unemployed and end up incurring more debt like medical debt. However, if your previous income was of the sort that is too much for a 7, maybe you do need to go forward with this nuclear option to avoid a 13.