Posted on: 15 March 2019
Paying bills by automatic draft is convenient and ensures that we don't forget about them. Unfortunately, the time may come when paying any bill becomes an anxiety-filled chore. When it becomes too much juggle the house payment, credit card bills, grocery money, and more, it may be time to consider filing a chapter 7 bankruptcy. There are some additional considerations when some of your bills are taken automatically from your checking account, so read on to learn more.
What to Know About the Automatic Stay
If you have been hounded by creditors, are about to have your utilities turned off, or are about to be sued for non-payment in court, your filing puts an automatic stop to all those things and more. The automatic stay is effective immediately and prevents almost all forms of bill collecting activity. While some of the effects of the automatic stay are only temporary, often that is all that is needed to get caught up on important bills like your car payments and mortgage.
The Automatic Stay and Automatic Drafts
When collection activities come to a stop, that means a full stop. You should not receive so much as a billing statement from any of your creditors after you perform your federal chapter 7 filing. In those terms, however, some of the bills you pay using your automatic drafts may also cease to be paid. In some instances, the financial action of removing money from your checking account to pay a bill is considered a violation of the automatic stay. Creditors tend to play it very safe when it comes to abiding by the bankruptcy codes.
The Nature of the Debt
When it comes to paying bills during the bankruptcy process, things can get tricky. You must pay certain bills to avoid losing the property or being without utilities. If your power is about to be turned off, the automatic stay only stops the shut-off for a few weeks, so you must continue to make payments. In some cases, utility payments fall into a category that is exempt from the automatic stay, so talk to your bankruptcy lawyer for more information.
If you want to keep certain property, like a car or your home, you must take action to make those payments using other means. Creditors may not be able to send you a bill, but you may be able to send them proof of money kept in an escrow account instead. In other cases, you can make online payments or send in payments without being billed.
Speak to an attorney like Greg Dunn Bankruptcy Attorney to learn more about dealing with automatic drafts during bankruptcy.Share