Once you file for bankruptcy the automatic stay goes into effect, which is a provision in the U.S. Bankruptcy Code that stops creditors from taking collection action. 11 U.S.C. § 362. The automatic stay puts an end to all collection activity, including collection phone calls, pending law suits, wage garnishments, bank levies, repossessions, foreclosure proceedings, and even sending bills.
When a Creditor Stops Sending Statements
One unintended effect of the automatic stay is that creditors who you want to continue to pay will stop sending monthly statements, making it more difficult for you to pay your bill on time.
We most often deal with this issue when a person wants to keep their house or car and file for Chapter 7 bankruptcy.
- If you want to keep your house through bankruptcy, in a Chapter 7 or Chapter 13 you must continue to make your on-time monthly mortgage payment.
- If you want to keep your car through bankruptcy, you must continue to make your on-time monthly car payment (unless the repayment is included inside your Chapter 13 plan).
- If you fail to make your payments during bankruptcy your property could later be subject to foreclosure or repossession.
In many cases it is challenging to logistically make your monthly payment. Your creditor will most likely stop sending statements in an effort to abide by the automatic stay. Also, if your monthly payment used to automatically draft from your bank account, your creditor will likely discontinue taking those payments. This too is in an effort not to run afoul on the prohibition against collection activity.
You can request that your creditor send statements during the bankruptcy. While you are working to get your monthly statements delivered, you must still be diligent to make your monthly payment. During this time you may have to send a check to your creditor in advance of the due date. Make sure you keep records of the checks sent and copies of cashed checks. Unfortunately it is not uncommon for creditors to misapply or not apply payments.
Bills You Must Pay During Bankruptcy
Once you file for bankruptcy you no longer have to make payments on debts that will be discharged through the bankruptcy or paid through the Chapter 13 plan, such as your credit card and medical debts. However, it’s important to continue to pay certain bills.
Bills you must pay during bankruptcy include:
- Your monthly mortgage payment if you plan to keep your house.
- Your monthly car payment if you plan to keep your car or other secured debt (unless the payments are included in your Chapter 13 plan).
- Payments on domestic support obligations.
- You are obligated to pay the following bills as they become due each month:
- Utility bills
- Other monthly bills that become due if you plan to continue receiving the service, such as your cell phone and cable bill.
It is critical that you talk with your bankruptcy attorney about which bills you are obligated to continue paying during bankruptcy, and which bills you can stop paying. Failure to make on-time payments on certain bills can lead to harsh consequences. Make sure you understand exactly what bills you must continue to pay and the best method by which you can make the payment.
Call us today at (912) 351-9000 or contact us to schedule a free consultation.
We are a debt relief agency. We help people file for bankruptcy relief under the U.S. Bankruptcy Code.