Be Careful Paying Creditors before Chapter 7 Bankruptcy

If you are considering filing for Chapter 7 bankruptcy in Phoenix, Arizona, consult with a qualified bankruptcy attorney. Before the filing it is important that you make payments to all of your creditors or to none of them. Paying just some of your debts means showing preference for one creditor over another. It is the court’s job to make sure that all creditors are treated equally in a Chapter 7 bankruptcy filing.





Within a 90 day period of your Chapter 7 bankruptcy filing, any payments that you make to creditors can be taken away from that creditor and returned to the trustee of your Chapter 7 bankruptcy case. That period is up to one year for payments made to an “insider,” such as a relative or friend. This rule does not apply to regular and necessary expense payments such as car payments, house payments, rent, and utilities.

An experienced bankruptcy law firm, such as The Frutkin Law Firm, PLC, in Phoenix, AZ, should be consulted about how to handle debt payments prior to filing for Chapter 7 bankruptcy.