Stop paying bills before filing bankruptcy?


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Dear Bankruptcy Adviser,
I have a loan that will be included in my bankruptcy, but I am not going to start my case for another three months. Should I make payments or just stop paying now?
— Betty

Dear Betty,
Bankruptcy filers are either current on bills but overextended, or delinquent and ignoring the problem.

Those that are delinquent are usually dealing with harassing calls, lawsuits, wage garnishments and/or bank levies. These individuals are stressed because they don’t have the extra money to even file bankruptcy and are concerned all the time that their wages are going to be garnished or they are going to have their assets seized.

You sound like you are one of those people that are current on bills but have decided to file bankruptcy. Your question is excellent because you don’t know the protocol and don’t want to do anything that would get you into trouble.

Since you decided to file bankruptcy, you definitely should stop using any credit cards you are putting in the filing. Because you are asking about a loan, you likely have already used the money. Let’s hope that you didn’t spend it frivolously because creditors review your accounts after receiving a bankruptcy notification. You don’t want them to see excessive spending in the three to six months leading up to the filing.

Even large charges outside of the six-month window will be scrutinized. It doesn’t matter if you intended to file bankruptcy when you bought that new, 50-inch flat-screen TV. The appearance of improper behavior is all that matters.

To answer your question, you can also stop paying on any loans you will be including in the filing, as long as it’s not a student loan. But you need to be ready for the collection calls that will start coming after the first missed payment. Initially, these calls generally will not be negative and the caller won’t be too aggressive. They will simply ask for an update assuming you missed the payment in error. If you’d like, you can let the representative know you are filing bankruptcy.

The next couple of calls may be a bit more aggressive in tone. Simply stay calm and continue to let the representative know that you intend to file bankruptcy each time. The creditor will receive the bankruptcy notification once you file and you will no longer need to worry about future calls.

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