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May I pay off some of my creditors before filing for bankruptcy?

No, you are not permitted to pay off some of your creditors prior to filing for bankruptcy. That would give those creditors an advantage over the other creditors with respect to how quickly and/or completely they were paid. This is referred to as a preference. Accordingly, the court may order any such payments to be rescinded so that the money may be fairly allocated among the various creditors in the case. You may, however, choose to pay off some of your debts early after you file, as long as you keep up with your court-ordered monthly payments. There are some legal planning techniques that can be used to pay some creditors, and in some cases relatives, without violating any bankruptcy statutes. An experienced bankruptcy attorney should be able to explain how this can be accomplished.

Barry Rosenzweig
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Barry Rosenzweig, has 25 years experience as an attorney helping clients solve their legal problems.