If a borrower is current on their debts but they’re considering filing for bankruptcy protection, it’s reasonable for them to ask if they should stop paying their creditors. When a person files bankruptcy, an automatic stay prevents creditors from calling them, sending letters, or putting negative entries on their credit report. However, there’s no similar pre-filing protection. Here are a few things to think of when assessing debt.
Personal Loans, Medical Bills, and Credit Card Debt
In most cases, a borrower can safely stop making payments as long as they’re okay with the fact that they’ll face collection efforts until they file. If a borrower uses a card immediately before filing, they may choose to continue making payments. These situations are complex and should be addressed by a Cheap Bankruptcy Attorney In Olympia WA.
Auto Loans
If a borrower fails to make car payments, the lender will try to repossess the collateral. This is fine when the debtor no longer wants the vehicle; they can stop making payments. However, if they want to keep the car, they should continue to make payments.
Mortgages
When borrowers don’t make mortgage payments, their creditors will probably try to foreclose. It’s okay for the borrower to stop making monthly payments if they don’t want the home, but if they want to stay, they should pay.
Taxes
Some taxes cannot be discharged in a Chapter 7 bankruptcy, but some can. This is one of the most complex areas of bankruptcy, and a Cheap Bankruptcy Attorney In Olympia WA can provide case-specific advice. If the taxes are sure to be discharged, the debtor may choose not to make payments.
Credit Union Set-Offs
If a borrower has a savings or checking account with a credit union or bank and they owe money, the institution may take money from those accounts and apply it to the debt. This is known as a set-off, and it can spell financial disaster. Consider moving money out of those accounts to prevent this.
Filing for bankruptcy is never an easy decision, and it can be difficult to know how to handle various types of debt. For advocacy, legal protection, and advice, call a local bankruptcy attorney today.
