One of the questions I often get is whether you can use money in your checking account to pay down your mortgage prior to filing bankruptcy.  After all, Florida law allows you to keep only $1,000 in your checking account if you are single but you can keep all the equity in your home.  Sounds like a good idea?  Well, not so fast.

Although you are allowed to keep all the equity in your home if you filed bankruptcy and have resided in the home for at least 40 months prior to filing, you are not allowed to keep extra cash payments made toward the principal of the mortgage 40 months prior to filing. 

Note that this rule does not apply if you live in Florida and choose not to file bankruptcy.

Consider a consultation with a bankruptcy attorney in Cape Coral before you move money around.
 


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