Should I sell my assets to pay off creditors before claiming bankruptcy?
I only have 1 asset worth paying off and thats one of my cars. If I sell this car, I can pay some of the creditors, but not all. I assume I will have to show proof of payng creditors if I claim BK after I have done this.
I see your point rpg, but the exemptions for Arizona will cause my vehicle to be taken because it is paid off and they will take this asset, sell it, and use the money from that asset to pay off the creditors.. granted, i see what your saying, because i would pay off the creditors that I would want to pay off.. so its good knowing that they will take the money back..
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I don’t understand why you are going to all this effort to help some of your creditors and not others. If you are going to lose the care in a Chapter 7 anyway, you might be better of selling to the car to pay for living expenses like rent, health insurance or debts that won’t be discharged in bankruptcy, You might even consider converting the proceeds to an exempt assets that you could keep after the bankruptcy.
Favoring one creditor over another can result in the litigation to get the money bank. It is called a preferential transfer and bankruptcy law says that the creditors must receive equal treatment. You cannot favor one over the others.
You need to consult a qualified bankruptcy attorney, one who is a member of the National Association of Consumer Bankruptcy Attorneys.
Don’t do this. Talk to a bankruptcy attorney first.
The creditors you pay off would be deemed to have received preferential payments to which they were not entitled and the trustee would get that money back from them and distribute it according to the priorities specified by law in the bankruptcy code.
What’s more, you may be able to keep your car when you file bankruptcy. The point of bankruptcy in the United States is not to leave debtors maximally impoverished. Its to provide them with an opportunity for a fresh start.