Live in Texas. Credit score is 720. To date, never late on any credit, house, or car payments. Iíve been using my credit cards to pay for food, utilities, etc. after becoming unemployed. I had to borrow money from a relative to help me pay my property taxes with the agreement to repay as soon as I received my income tax refund check. At the end of February, I paid back relative as agreed; I also continued to make additional monthly payments to all other creditors. Now struggling with paying on credit cards, I decided itís time to file chapter 7 before I go beyond 30 or 60 days late with payments and preventing derogatory marks on my credit reports lowering my current 720 credit score. I was told, due to making that payment to my relative in February, I had to wait 6 months before I can file. Is there something I can do to expedite the process, because by the time I get into bankruptcy court 6 or 7 months from now, my credit score will be horrible by defaulting on all payments to credit cards over 180 days.
2 Answers from Attorneys
You can file now if you want to.
You are not REQUIRED to wait because you paid that relative, although your case will be harder because of it and the relative may catch some problems because of it.
Paying off your relatives right before you file bankruptcy is not a recommended practice. Here's a handy list of other stuff people are tempted to do but which tend to cause problems in the bankruptcy case:
As Mr. Polk states, there is no restriction on your filing the bankruptcy right now if you want to. The possible problem is for your relative who you repaid the money. Any unsecured creditor who gets repaid money in the 90 days prior to filing the case, and any close friend, relative, or other "insider" who gets paid in the one year prior to filing, is at some risk of having the chapter 7 trustee try to recover the money from the payee in order to spread it out equally among all the creditors. It's referred to as a "preference" to pay some creditors at the expense of others. It might or might not actually matter in your case because the relative may not have actually gotten a preference, but that is more the relative's problem than yours.
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