Many people who find themselves underwater financially seek out different options to alleviate their financial stress — and some decide that bankruptcy is the right option.
One common question that individuals looking to file bankruptcy ask about is their ability to stop paying their bills once they commit to going down this path. Here are some thoughts to consider.
You can use the money you aren’t paying on bills to file bankruptcy
The flood of collections calls that you’re surely receiving if you’re drowning in debt can seem unrelenting — but an automatic stay goes into place once you file your bankruptcy petition. One exception is student loans, though. This isn’t a dischargeable debt in bankruptcy, and thus, your lender can continue trying to collect what you owe.
As for most of your other debts, legal analysts suggest that no longer paying some of your credit card bills may be justifiable as they’re likely to be discharged by the bankruptcy trustee. Many debtors abandon the minimum payments they were making on their debts so that they can use the money to file their bankruptcy petition, instead — and that’s understandable.
You have to be careful about not acquiring new debt and then abandoning it
Since you’re headed toward bankruptcy, you should not add additional debt on your existing credit cards (if you haven’t yet reached your credit limit) or take out any new credit cards or loans during this time.
Doing either one of these in the six months leading up to your filing, especially if you have no intentions of repaying those bills and you plan to have them discharged as part of your bankruptcy, may result in the trustee dismissing your case.
What steps should you take after deciding bankruptcy is right for you?
If it’s time to seriously start looking at bankruptcy, you shouldn’t try to make all of your decisions without guidance. An attorney can go over the steps you should take to minimize the chances of that happening.