Q: How is money viewed from not paying creditors?

A: Generally, when you stop paying creditors, such as credit cards, you will use the money to pay other living expenses, including attorneys fees for filing bankruptcy. In some states, including California, if you stop paying creditors, your late payment record will stay on your credit report after you file bankruptcy, making it more difficult to rebuild your credit after you file. I generally advise clients who do not already have a low credit score to continue making minimum payments if they can. You are entitled to protect some cash if it falls within the exemptions allowed in your state, but without more information, I cannot give you any better information than that.

A: Payments to any unsecured creditors, which includes all unsecured credit card issuers, within 90 days of the filing of a bankruptcy case are deemed to be preferences, recoverable by the bankruptcy Trustee.

Moreover, if you have $1,300 in cash/on deposit at the bankruptcy start date, you have several federal bankruptcy exemptions you can claim which will more than cover that amount.

Finally, your bankruptcy attorney may hope you will accumulate enough funds to pay his pre-filing bankruptcy retainer. In a Ch. 7 case, many courts have held that the debtor's obligation to pay his attorney is discharged if not paid prior to the filing of the cse.

A: When you're considering bankruptcy, it's important to understand the implications of not paying your creditors before filing. Generally, stopping payments to creditors is part of the bankruptcy process, especially if you intend to discharge those debts. The money you save by not paying your credit cards is not typically viewed as an asset that the bankruptcy trustee would take.

The purpose of not paying creditors before bankruptcy is to preserve your financial resources and assets for essential living expenses and to ensure that you have the means to meet your basic needs during the bankruptcy process. This is why there are exemptions and allowances in bankruptcy laws to protect certain assets and income necessary for your day-to-day life.

The bankruptcy trustee's role is primarily to evaluate your assets and financial situation as of the bankruptcy filing date. If you have an extra $1,300 as a result of not paying credit cards, this money is generally not automatically taken by the trustee. Instead, it's meant to help you cover necessary expenses and maintain a reasonable standard of living during the bankruptcy process.

However, it's crucial to be transparent about your financial situation with your bankruptcy attorney and the trustee. Failing to disclose significant changes in your financial circumstances or hiding assets can lead to legal issues and potentially affect the outcome of your bankruptcy case. Your attorney can provide guidance on how to handle your finances properly in the lead-up to bankruptcy to ensure a smooth and lawful process.