Car Insurance

[danaf]

If I pay my car insurance for the entire year out of part of my tax refund (very close to filing bk) - are there any ramifications?

Also, if I do this, can I use it in my monthly budget (divided by 12)?

[danaf]

bump

would this be considered a preferential payment?

[HHM]

It is not a preferential payment...(assuming your car insurance company bills by the year, most companies I know of bill for 6 months). Your car insurance company is NOT a creditor, they do not lend you money.

As for putting the insurance in your budget, I think you can, but be prepared to pad your budget elsewhere if the trustee actually asks if you have already paid your car insurance.

[danaf]

thank you HHM. Mine gives me the option, monthly, 6 months, 1 yr -

[HHM]

Ok, then it should not be a problem to pay for the entire year.

[BearChaser303]

But what if for several years prior they only paid monthly, and then just prior to filing they paid an entire year at once. Couldnt this be considered a preferential payment, if the trustee decided to pursue it?

[danaf]

I just changed insurance and my new insurance allows me the option of paying a yr at a time. My old insurance allowed up to 6 months, which I typically did. So this is not a worry for me.

[HHM]

But what if for several years prior they only paid monthly, and then just prior to filing they paid an entire year at once. Couldnt this be considered a preferential payment, if the trustee decided to pursue it?

Your car insurance IS NOT A CREDITOR. The whole preferential payment thing applies to creditors...i.e. companies/people that LEND you money. Car insurance is a service/product...if you buy 5 gallons of milk instead of the normal 1 gallon you drink in a given week, is that preferential...no!

[Cali]

I wish my insurance company let me pay a year in advance.

[twuoo]

Some companies, if you don't pay it all in advance, now charge a "service fee" and I have one place that tacks on $7.00 x 4 billing cycles. Just to have the advantage of extending payments.

[CindyLou]

When I saw an attorney in anticipation of filing (I ended up filing pro se) he told me that in my trustee would frown heavily upon a couple of things. One was increasing the amount going into a retirement right before filing (anything going in at least a year before was ok) and chaning things such as car insurance and life insurance that were usually paid months to a yearly status.

Now that was my trustee in my district....so you may just need to ask if it is frowned upon in yours. Maybe going to a 3 month or 6 month may not be so "in your face" as a year....

[BearChaser303]

When I saw an attorney in anticipation of filing (I ended up filing pro se) he told me that in my trustee would frown heavily upon a couple of things. One was increasing the amount going into a retirement right before filing (anything going in at least a year before was ok) and chaning things such as car insurance and life insurance that were usually paid months to a yearly status.

Now that was my trustee in my district....so you may just need to ask if it is frowned upon in yours. Maybe going to a 3 month or 6 month may not be so "in your face" as a year....

My attorney told me the exact same thing.

[HHM]

When I saw an attorney in anticipation of filing (I ended up filing pro se) he told me that in my trustee would frown heavily upon a couple of things. One was increasing the amount going into a retirement right before filing (anything going in at least a year before was ok) and chaning things such as car insurance and life insurance that were usually paid months to a yearly status.

Now that was my trustee in my district....so you may just need to ask if it is frowned upon in yours. Maybe going to a 3 month or 6 month may not be so "in your face" as a year....

Being frowned upon and being fraud are different things...the trustee has no legal mechanism to recover the funds or hold the debtor liable. It's no different than putting money in an IRA before for filing. Your car insurance company is not a creditor, paying your car insurance company in full before filing is NOT a preferential payment.