One of the most common questions from individuals who are about to file bankruptcy or are in the process of filing is, “Should I keep paying my bills or stop paying them before I file?” Since most who have decided to file for bankruptcy are either very overextended or delinquent, it’s not surprising that the question would come up. It’s an important issue, but it’s not the first issue that needs to be addressed.
The first change you should make about how you are dealing with your finances when preparing to file for bankruptcy is to stop using credit. If you have credit cards, do not use them to make any new purchases. Creditors review your accounts when they receive a bankruptcy notification. If they see excessive spending in the three to six months prior to your bankruptcy filing, there could be a problem.
It could even be a problem if the charge was made outside of the six-month window if the purchase is substantial. Even if you had no intention of filing for bankruptcy when you outfitted your living room with a new surround sound system on credit, creditors will view it as improper behavior when they receive the notification of bankruptcy filing if it’s too close to your bankruptcy.
Once you have decided to file for bankruptcy, you can stop paying on your loans and credit accounts that will be included in the bankruptcy (except for student loans). When you stop making your payments you need to be prepared to start receiving collection calls. For the first month or two after you stop making your payment, the collection calls won’t be too aggressive or negative. They’ll typically just remind you of your missed payment. They’ll probably assume that you missed the payment on accident if you don’t have a history of missed payments. Whether or not you advise the representative of your intention to file for bankruptcy is up to you at this point.
Once your accounts get more than a couple months past due, the collection calls will start to get more aggressive, but just stay calm. Simply advise the representative that you will be filing for bankruptcy whenever you get a phone call regarding payment, etc. Your creditors will all receive a notification of your bankruptcy once you file. At that point, you will no longer receive collection calls.
For additional advice on how to approach filing for bankruptcy and managing collection calls, contact the southern California bankruptcy experts at Westgate Law.