Q: When filing bankruptcy, do you stop making credit card payments after finalizing of branruptcy or when you file?
Me and my husband are filing for Chapter 7 bankruptcy due to unforeseen medical and house repairs bills. We've never been late or missed a payment but are struggling to survive and make the payment. Do we continue to make credit card payments until the bankruptcy is finalized or do we stop making the payments when we file our bankruptcy? We do not want to be listed under the "no intent to pay back" we have stopped using the credit cards except for some payment such as groceries or gas because we don't have enough money to pay for that out of our bank account because of high credit card payments. We just want to make sure we don't mess up our bankruptcy in any way. We just need to know when to stop making our credit card payments?
A: You would stop paying before or when you file for bankruptcy protection. Do not wait for the bankruptcy case to be "finalized". If you were to charge anything after you file (assuming the unlikely event that the charge "goes through"), that would be a post-petition debt and not dischargeable.
A: If the debt is an unsecured debt, it will be completely discharged in bankruptcy. Therefore, paying before or after you file on a debt that will be discharged in bankruptcy is a waste of money. Good luck.
A: There are pros and cons to continuing to make credit card payments leading up to a bankruptcy. On the pro side, since you are current on all cards, your credit score will likely not drop as much as it would if you go into default status on the cards for a few months. On the con side, you are paying dollars towards a debt that will likely be discharged in your bankruptcy. Assuming you would otherwise be able to retain those dollars through your bankruptcy exemptions, then you are losing money that you would otherwise be able to keep. Moreover, "preference" issues could arise by paying creditors more than their pro-rata share prior to a bankruptcy filing, which the trustee could try to avoid (i.e., reverse).
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