Should I pay my car off to build my credit or file it in a chapter 7? 18 Answers as of October 03, 2012

I currently have debt that needs to be filed in bankruptcy, and need to know if I should pay my car off at income tax or just file it in a chapter 7 because my credit is bad anyway.

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Janet A. Lawson Bankruptcy Attorney
Janet A. Lawson Bankruptcy Attorney | Janet Lawson
You rebuild credit by making monthly payments on time. A lump sum payment isn't going to help you much.
Answer Applies to: California
Replied: 10/3/2012
Law Office of Norman Moore
Law Office of Norman Moore | Norman P Moore Jr
The real question is: Do you want to keep the vehicle? If you do, and you are current, keep paying for it and file Chapter 7. If you are not, you can file a 13 to get caught up. I think the impact of paying it off, then filing, on your credit would be negligable at best.
Answer Applies to: Wisconsin
Replied: 10/1/2012
Danville Law Group | Scott Jordan
You are assuming you will lose your car due to the bankruptcy. This is highly unlikely. I would advise against paying off the car before you file for bankruptcy. The debt on the car will work to your advantage combined with the California vehicle exemption will probably allow you to keep your car. I suggest you contact a local bankruptcy attorney for a consultation.
Answer Applies to: California
Replied: 10/1/2012
Wild Sky Law Group, PLLC
Wild Sky Law Group, PLLC | Roxanne Eberle
Bankruptcy will damage your credit no matter what. The important thing is that you don't let your credit score slip too low before filing so you have less far to recover after your discharge.
Answer Applies to: Washington
Replied: 10/1/2012
LAW OFFICE OF MARGARET L. EVANS, PC
LAW OFFICE OF MARGARET L. EVANS, PC | Margaret L. Evans
Question: Should I pay my car off to build my credit or file it in a chapter 7? *- not sure what you mean by "file it" in a chapter 7 .* Question Detail: I currently have debt that needs to be filed in bankruptcy, and need to know if I should pay my car off at income tax or just file it in a chapter 7 because my credit is bad anyway.* - If you want to keep the car, then keep making the payments on it, even during the bankruptcy because its a Schedule D secured creditor claim and you can reaffirm that debt in bankruptcy if you want to keep the car. Filing a chapter 7 and wiping out your debt will repair your credit faster generally. *
Answer Applies to: South Carolina
Replied: 10/1/2012
    Law Offices of J. L. Haddock, PLLC
    Law Offices of J. L. Haddock, PLLC | Jared L. Haddock
    Generally, I would say no, do not pay off the balance owed for the car before filing for Chapter 7 Bankruptcy protection. I would recommend that you consult with a bankruptcy attorney before doing anything, however. A qualified attorney will be able to discuss in more detail what you should and should not pay with your tax refunds in the context of Chapter 7.
    Answer Applies to: Michigan
    Replied: 10/1/2012
    Charles Schneider, P.C.
    Charles Schneider, P.C. | Charles J. Schneider
    That depends on the exemption schedule you choose and what else that you wish to exempt. See an attorney.
    Answer Applies to: Michigan
    Replied: 10/1/2012
    Benson Law Firm
    Benson Law Firm | David Benson
    Do NOT pay off your car loan until you speak with a bankruptcy attorney. You are permitted an exemption in Ohio of only $3,450.00. I've seen many a debtor rue the day they decided to pay down a loan in anticipation of filing Chapter 7.
    Answer Applies to: Ohio
    Replied: 10/1/2012
    Law Office of Stuart M. Nachbar, P.C.
    Law Office of Stuart M. Nachbar, P.C. | Stuart M. Nachbar
    File and if your counsel knows what he/she is doing, you will be able to keep the car. If in NJ and not w/ counsel, please give me a call for a free consult.
    Answer Applies to: New Jersey
    Replied: 10/1/2012
    Goldsmith & Guymon
    Goldsmith & Guymon | Marjorie Guymon
    Your car may be useful in helping you qualify for bk if you are over medium income. Depending on the amount of your tax refund, you may need it to retain counsel to file, and can exempt $1,000 of it under your wild card exemption. Your vehicle is exempt up to $15,000, so if by paying it off you exceed the equity exemption you'll have to turn over the excess equity. I recommend you seed legal advice to help with your planning.
    Answer Applies to: Nevada
    Replied: 10/1/2012
    R. Jason de Groot, P.A
    R. Jason de Groot, P.A | R. Jason de Groot
    That's up to you, but you know very little about bankruptcy and should consult with an attorney about it. It is very complicated.
    Answer Applies to: Florida
    Replied: 10/1/2012
    Law Office of D.L. Drain, P.A.
    Law Office of D.L. Drain, P.A. | Diane L. Drain
    It depends on the state where you live - the exemptions allowance for vehicles. Please understand that filing for bankruptcy is a very complicated process. It is wise to talk to an experienced bankruptcy attorney before deciding to take this important step. Most Arizona bankruptcy attorneys offer a free consultation about the basics of bankruptcy.
    Answer Applies to: Arizona
    Replied: 10/1/2012
    Knute Rife
    Knute Rife | Knute Rife
    If you file, the car goes in. You can't pick and choose what goes into the bankruptcy. Also, paying the car off before filing may affect the exemption you can claim for it in bankruptcy. Finally, if you file, the trustee will claim at least part of that tax refund, so don't count on having it.
    Answer Applies to: Utah
    Replied: 10/1/2012
    Eric J. Benzer, Attorney at Law
    Eric J. Benzer, Attorney at Law | Eric Benzer
    Please call an attorney ASAP.
    Answer Applies to: Maryland
    Replied: 10/1/2012
    The Law Office of Darren Aronow, PC
    The Law Office of Darren Aronow, PC | Darren Aronow
    You should not pay off your car if you are filing chapter 7 because you may then have too much equity and risk the trustee seizing your car. If you are going to file then you should go see an attorney so you do not hurt yourself.
    Answer Applies to: New York
    Replied: 10/1/2012
    Law Offices of Terrell Monks
    Law Offices of Terrell Monks | Terrell Monks
    If you need to file bankruptcy, be very careful about purchasing or paying off assets. The exemption on one car in Oklahoma is capped at $7500. If you own a car with more equity than that, you risk losing it.
    Answer Applies to: Oklahoma
    Replied: 10/1/2012
    Mauritz Van Niekerk, Attorneys at Law
    Mauritz Van Niekerk, Attorneys at Law | Christiaan van Niekerk
    You should file it.
    Answer Applies to: New York
    Replied: 10/1/2012
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