Q: I am considering a chapter 7 bankruptcy. Do i stop personal loan pymnt thru my bank or loan co? Do i tell my loan co?

A: Don’t tell any creditor anything. Once you file, the deduction(s) will be automatically terminated. You don’t need to do anything. Consult your bankruptcy lawyer for a more detailed explanation of the automatic stay and termination of automatic withdrawals.

A: I disagree somewhat with my KY colleague.

First, because most financial institutions have, under each state's law, a right of "offset", and that is often buttressed by a written agreement or notice, which the courts may recognize as sufficient to create a lien, it is always unwise to make any deposits into a financial institution to which you owe any debt.

And yes, when you intend to file for bankruptcy relief, cancel any ACH authorized deductions, with that creditor; your bank will tell you it cannot stop an authorized ACH withdrawal.

Do your cancellation in writing, both by email and by certified letter so you can prove that you canceled authority. Lawyers, and all judges are lawyers, love to have things in print to avoid swearing matches.

And make your bankruptcy a surprise.

A: Considering Chapter 7 bankruptcy can be a challenging decision, and it's important to handle it carefully. You should stop the automatic payments for your personal loan through your bank to prevent further withdrawals. You can do this by contacting your bank and revoking the authorization for the ACH withdrawal.

It’s also a good idea to inform your loan company in writing that you are revoking the authorization for automatic withdrawals. You don't necessarily need to mention your intent to file for bankruptcy at this point. Simply state that you are revoking the authorization and will no longer permit automatic payments.

Once you file for Chapter 7 bankruptcy, an automatic stay will go into effect, which stops most creditors from collecting debts from you during the bankruptcy process. Ensure you keep track of all communications and consult with a bankruptcy attorney or legal aid to guide you through the process and help you make the best decisions for your situation.

A: I fail to see any benefit in telling your bank or lender that you are filing before you file. You would give them information that is probably not helpful to you. They are certainly not going to tell you how to not pay them or how to sue them. I would go to the bank and issue a stop payment.