Paying Off Debt: Who to Pay Before Filing Bankruptcy

A big topic with bankruptcy cases is that of preference payments.  An insider preference payment is any payment made within the past year to a family member, friend or business associate.  If this type of payment was made during the past year, the Chapter 7 trustee has to recover the amount paid to the family member, friend or business associate, and share the funds with other creditors.  In a Chapter 13 case,  you have to repay to unsecured creditors at least as much as you paid during the past year to any family members, friends and/or business associates. If you are considering filing bankruptcy, you should not repay family members, friends, or business associates in advance of filing your bankruptcy.

Chapter 13: Past-Due Personal Property Taxes

If you have over-due personal property taxes for a motor vehicle, filing Chapter 13 bankruptcy lets you repay those taxes over time, for up to five years, and get a license renewal for your vehicle once you receive your Chapter 13 discharge.