Bankruptcy

Planning Bankruptcy, Stop Paying Creditors?

By Kurt O'Keefe, Attorney at Law

You might file bankruptcy, well, for sure, so you stop paying those annoying creditors, but when is the best time?
The answer is:  it depends.

What did you expect?  I am a lawyer.

Keep paying the mortgage or mortgages if you are keeping your house.

Keep making the lease payments or payments to purchase the vehicle or cars you are keeping.

However, even that depends on the bankruptcy chapter you will be filing.

In the some bankruptcy courts, you must make that payment through the Chapter 13 trustee as part of your plan, if you are behind on a mortgage or other secured creditor payment like a car.

So  you need to consult with your attorney on the best use of your funds before you file, maybe yes, maybe no, maybe for awhile until you figure out for sure which way you want to go.

Things that you will keep using, and are current on, you keep paying, like water bills, gas, electric, cable, internet.

If you are behind on these, those have to be listed as debts on your bankruptcy schedules, like anything else.

The utilities get hundreds or thousands of bankruptcy notices every month, they know what to do when they get one.

They will send you a new bill from the bankruptcy filing date forward, that is, for what you use after filing.

Gas and electric utilities are also governed by state regulatory agencies which restrict what they can do.

Not so much with cable and internet, though this varies by location.

You should see if you can get a better deal somewhere else, check the other service providers.

You need to cut corners and save money, you are filing bankruptcy.

And about credit cards?

Unless you pay it off every month like the electric bill, it is like American Express used to be:

Stop!

Right away!

Now!
Do not pass go, do not collect $200!!!
You are just throwing that money away.

You are filing bankruptcy, you need the money more than they do!
Planning Bankruptcy, Stop Paying Creditors?

Full post as published by Bankruptcy Law Network on August 08, 2010 (boomark / email).