{"id":6692,"date":"2019-02-26T16:58:11","date_gmt":"2019-02-27T00:58:11","guid":{"rendered":"https:\/\/robert-russell.com\/?p=6692"},"modified":"2020-11-16T11:34:58","modified_gmt":"2020-11-16T11:34:58","slug":"should-i-stop-paying-creditors-if-im-going-to-file-for-bankruptcy","status":"publish","type":"post","link":"https:\/\/robert-russell.com\/should-i-stop-paying-creditors-if-im-going-to-file-for-bankruptcy\/","title":{"rendered":"Should I Stop Paying Creditors If I&#8217;m Going to File for Bankruptcy?"},"content":{"rendered":"\r\n<p>If you are current on your debts, but you know you are going to be filing bankruptcy soon, it is reasonable for you to ask if you can\/should stop paying creditors now.<\/p>\r\n\r\n\r\n\r\n<p>When a Debtor files bankruptcy, the \u201cautomatic stay\u201d prohibits creditors from calling you, sending you dunning letters, placing negative entries on your credit report and suing you, etc.\u00a0 However<em>, prior to filing, there is no such automatic stay or protection from collection efforts<\/em>.\u00a0 That means that if you stop making payments, you should not be surprised if you are subjected to collection efforts including but not limited to telephone calls, letters, negative credit report entries, lawsuits, garnishment (assuming a judgment exists), collateral repossession\/foreclosure efforts, bank\/credit union setoffs, etc.<\/p>\r\n\r\n\r\n\r\n<p>Here is what you might think about with these certain types of debts:<\/p>\r\n\r\n\r\n\r\n<ul>\r\n<li><strong>Credit Cards\/Medical Debt\/Personal Loans<\/strong>:\u00a0 Most of the time you are fine not making the payments as long as you don\u2019t mind being subjected to collection efforts until you file bankruptcy.\u00a0 \u00a0If you just used a card before you decided you needed to file bankruptcy, you might choose to make payments on that card.\u00a0 This can be complicated.\u00a0 You should talk to qualified counsel on the subject.\u00a0<\/li>\r\n<li><strong>Car Loans:<\/strong>\u00a0 If you don\u2019t make car payments, at some point the creditor will likely attempt to repossess the vehicle.\u00a0 If you don\u2019t want the vehicle, then you can stop making payments as long as you don\u2019t mind the creditor potentially repossessing the vehicle.\u00a0 If you want to keep the vehicle, you <em>might<\/em> choose to keep making payments. \u00a0There are scenarios where you can stop making payments, but each case is different.\u00a0 \u00a0You should talk to qualified counsel on the subject.\u00a0<\/li>\r\n<li><strong>Home Loans:<\/strong>\u00a0 If you don\u2019t make home loan payments, at some point the creditor will likely attempt to foreclose on the home.\u00a0 If you don\u2019t want the home, then you can stop making payments as long as you don\u2019t mind the creditor taking steps towards foreclosure (which normally takes months after missing payments).\u00a0 If you want to keep the home, you might choose to keep making payments.\u00a0 There are scenarios where you can stop making payments, but each case is different.\u00a0 \u00a0You should talk to qualified counsel on the subject.\u00a0<\/li>\r\n<li><strong>Taxes:<\/strong>\u00a0\u00a0 Some taxes are not discharged in bankruptcy.\u00a0 Some are discharged.\u00a0 This can be complicated.\u00a0 \u00a0If you know a tax is going to be discharged, you might choose to not make a payment.\u00a0\u00a0 You should talk to qualified counsel on the subject.\u00a0<\/li>\r\n<li><strong>Child\/Spousal Support:\u00a0 <\/strong>These debts are not discharged in bankruptcy.\u00a0 Filing bankruptcy soon is not a good reason to not pay these debts<\/li>\r\n<\/ul>\r\n\r\n\r\n\r\n<p><strong>Beware \u2013 Bank\/Credit Union Setoff!\u00a0 <\/strong><\/p>\r\n\r\n\r\n\r\n<p>If you have a checking or savings account with a bank or credit union AND you owe them money, then the bank\/credit union can grab money from your checking\/savings account to make payment on the debt. (This is called a &#8220;setoff&#8221;.) \u00a0 Therefore, you might want to move your money out of your bank\/credit union before you miss a debt payment to them<\/p>\r\n\r\n\r\n\r\n<p><strong>Beware \u2013 Credit Union Cross-Collateralization!<\/strong><\/p>\r\n\r\n\r\n\r\n<p>Credit Union will often \u2018connect\u2019 any\/all loans they make to a party together via a \u201ccross-collateralization\u201d provision in the loan agreements.\u00a0 \u00a0For example, if you have a car loan and a personal loan with a credit union, the personal loan might also be secured by the car that is collateral for the car loan.\u00a0 That means that if you miss a payment on the personal loan, that may allow them to repossess the car even if you are current on the car loan.\u00a0 You should talk to qualified counsel on the subject.\u00a0<\/p>\r\n\r\n\r\n\r\n<p>I hope you found this helpful.\u00a0 We offer a free initial consultation if you have bankruptcy questions.\u00a0<\/p>\r\n\r\n\r\n\r\n<p>&nbsp;<\/p>\r\n","protected":false},"excerpt":{"rendered":"<p>If you are current on your debts, but you know you are going to be filing bankruptcy soon, it is reasonable for you to ask [&hellip;]<\/p>\n","protected":false},"author":4,"featured_media":10356,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[51,53,54,55,56,59],"tags":[],"_links":{"self":[{"href":"https:\/\/robert-russell.com\/wp-json\/wp\/v2\/posts\/6692"}],"collection":[{"href":"https:\/\/robert-russell.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/robert-russell.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/robert-russell.com\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/robert-russell.com\/wp-json\/wp\/v2\/comments?post=6692"}],"version-history":[{"count":0,"href":"https:\/\/robert-russell.com\/wp-json\/wp\/v2\/posts\/6692\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/robert-russell.com\/wp-json\/wp\/v2\/media\/10356"}],"wp:attachment":[{"href":"https:\/\/robert-russell.com\/wp-json\/wp\/v2\/media?parent=6692"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/robert-russell.com\/wp-json\/wp\/v2\/categories?post=6692"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/robert-russell.com\/wp-json\/wp\/v2\/tags?post=6692"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}