Can I pay off a mortgage before my bankruptcy is finalized?

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Can I pay off a mortgage before my bankruptcy is finalized?

I have just put in a Chapter 7 bankruptcy for myself. It was filed in September and has not yet finalized my husband was not involved. I have 2 mortgages in my name on my house, in which my husband and I live, that I reaffirmed on the petition. I owe $80,000 on the house that is worth approximately $145,000. I want to take the $80,000 out of my retirement 401K and pay off both mortgages. Is this going to cause a problem with the bankruptcy petition if I do this before the finalization. The trustee has already done his review.

Asked on November 26, 2012 under Bankruptcy Law, New York

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

Assuming the bankruptcy trustee is aware of your intent to pay off your mortgage via your 401 k retirement benefits then under federal bankruptcy law there is nothing improper about what you desire to do in order to pay off the mortgage on your home.


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