Bankruptcy Basics

Can I Stop Paying my Bills before Filing Bankruptcy?

We often consider bankruptcy once we get to a point where we can no long afford to pay our bills. This makes sense, as bankruptcy is specifically designed to help you recover from this sort of situation. Once you’ve decided to file bankruptcy, the idea of eliminating your bills is quite exciting, and it can be tempting to simply stop paying them. The logic is that you’re going to eliminate those debts anyways, so why not simply stop making payments on them?

Keep Paying Your Bills Leading up to Bankruptcy

You should ask your attorney about your bills, and discuss which, if any, you should keep paying. There are a few types of bills that you should specifically ask about, because you may need to keep making payments.

  • Car Loans and Mortgages – If you intend to keep the property securing any debt, your attorney may recommend you keep making your payments. For example, if you want to keep your car by reaffirming the debt through a Chapter 7 bankruptcy, you will be responsible for that debt after bankruptcy. If you stop making payments, you will simply fall behind on another bill!
  • Student Loans or any Debts that won’t be Discharged – Any debts that you won’t discharge through your bankruptcy will be your responsibility in the long run. Ask your attorney about how to handle these debts, and decide on a course of action to make payments. You may need to keep making these payments, as they will continue to be your responsibility even after bankruptcy.
  • Utilities and Rent – There are certain bills that you simply need to keep current to maintain your quality of life. If you stop paying your electric bill, the lights go out. If you stop paying your rent, you lose your apartment. Even if you are planning to file for bankruptcy, you must pay for the services that you use day to day to keep them.

    Stop Paying Unsecured Debts before Bankruptcy?

    There is another category of loans – unsecured debts. These loans are not secured by anything, meaning that there isn’t a piece of property you stand to lose if you stop making payments. Examples include credit cards, personal loans and medical bills. These are very common types of debt for all Americans, and the monthly payments are often some of our largest bills! But can you stop paying unsecured debts before your bankruptcy?

    Unfortunately this is one of those questions that can’t simply be answered the same for everyone. Everyone’s circumstances are different, and laws vary by state. You need to speak to your attorney about your individual debts and decide on a plan for your monthly payments. Just like you did for your secured debts, talk about what unsecured debts you have, how much you owe, how far behind you are on payments, etc. Your attorney will be able to help you figure out the best course of action. They may recommend that you keep paying all or some of your unsecured debts, or there may be some that they recommend you stop paying.