Preferred Payment Secure Creditor

[gravelgirl66 10]

Hi everyone, hope you can help.  I am assisting a friend in preparing her to get ready to file Ch.7.  This should be a fairly straight forward petition...

 

The only thing we are hung up on, she does has 1 creditor that is a "secured creditor"- she stopped paying all CC, car, hospital bills, everything-- all  debts in Dec 2013, but continued to pay this creditor as it is her child's furniture, a refridgerator, and a bed.  She stated she needed to keep all these things, so she continued to pay this creditor.

 

How is this handled?  Should she try and pay off the creditor as soon as possible and delay the BK?  Or re-affirm the debt? She has made it adament that she will not let them "come get" the furniture.

 

Am I am unsure how to proceed?  Any advice would be very appreciated.

[WhoCares1000 722]

You would have to delay the BK to 3 - 6 months after the last payment to avoid a preferential clawback. Can they wait that long?

More interesting question is, did she get this stuff from a Rent-To-Own type store? If so, she would be better off letting them have the stuff back and saving her money from the payments to purchase said furniture/appliances used at Salvation Army, Goodwill, or Garage Sales. That stuff is no where near worth what she owes and re-affirmation agreements are dependent on whether the courts think you can afford to make said payments.

If she insists on reaffirmation or paying this off, the only question is when to time the BK. If she can wait, that pay off as quick as possible. If the wolf is at the door, file and them do a reaffirmation agreement if possible. If not, get ready to replace the furniture/appliances.

[bingo 40]

Paying off a secured creditor isn't a preference issue.

If she insists on reaffirming and is pro se she'll have a meeting with the bk judge to determine if a reaffirmation agreement is in her best interest.

What's the amount owed and from whom are they financed?

[jq26 862]

In 99.9% of cases, keep paying the furniture and don't reaffirm.  Not a preference issue (secured need to be paid) and the furniture company doesn't want the assets.  They want payment.  

 

This happens all the time, particularly with furniture and jewelry.