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).
Justia Ask a Lawyer is a forum for consumers to get answers to basic legal questions. Any information sent through Justia Ask a Lawyer is not secure and is done so on a non-confidential basis only.
The use of this website to ask questions or receive answers does not create an attorney–client relationship between you and Justia, or between you and any attorney who receives your information or responds to your questions, nor is it intended to create such a relationship. Additionally, no responses on this forum constitute legal advice, which must be tailored to the specific circumstances of each case. You should not act upon information provided in Justia Ask a Lawyer without seeking professional counsel from an attorney admitted or authorized to practice in your jurisdiction. Justia assumes no responsibility to any person who relies on information contained on or received through this site and disclaims all liability in respect to such information.
Justia cannot guarantee that the information on this website (including any legal information provided by an attorney through this service) is accurate, complete, or up-to-date. While we intend to make every attempt to keep the information on this site current, the owners of and contributors to this site make no claims, promises or guarantees about the accuracy, completeness or adequacy of the information contained in or linked to from this site.
