Making Monthly Payments During Bankruptcy

October 26, 2011

Automatic payments are a convenient way to pay your bills. An automatic payment is an arrangement for a specific amount of money to go from your bank account to the recipient’s bank account. Automatic payments are useful to pay monthly bills that do not change, like a monthly car or mortgage payment.

A direct debit is an agreement that the recipient can take money out of your account to pay your bill. You might authorize a direct debit for an electricity, phone, or credit card bill. Of course, a direct debit could be authorized for most any bill.

When you file for federal bankruptcy protection, the bankruptcy court automatically issues a temporary injunction called the automatic stay. This court order prohibits all of your creditors from taking any action to collect a debt from you. The automatic stay is very broad and applies to most creditors; even the ones that you want to continue paying.

Because of the automatic stay, creditors will routinely stop any direct debit of your bank account and refuse automatic payments. The purpose of this refusal is to remain in compliance with the court order and avoid further entanglement with the debtor’s bankruptcy case. This can be frustrating to the debtor who wants to pay a monthly mortgage payment or car loan bill.

The answer to this problem is simple: mail your payment to the creditor! Remember, the automatic stay prohibits a creditor from collecting on a debt, not accepting a voluntary payment. It is good practice to maintain good records of all payments made to secured creditors during your bankruptcy. Your check may not be cashed for weeks while your lender forwards the payment to another department now handling your loan (e.g. bankruptcy department). By sending your payment via registered mail, you will have a receipt of timely payment, regardless when the check is cashed.

The bankruptcy process provides quick and powerful relief when you have the help of an experienced guide. An experienced bankruptcy attorney knows how the laws and common practices will affect your case, and can lead you to a fresh start without complications.

More Blog Posts

CONTACT US

Use the form below to send us a note, call us at 214.890.0711 or chat with us live. We are eager to help with all your legal needs. Please keep in mind that any unsolicited information sent through our website cannot be treated as confidential. Contacting us through this site does not create a representation relationship with Fears Nachawati.

Inquiry Type

  • General
  • Personal Injury
  • Immigration
  • Bankruptcy
  • Drug Litigation
  • Family Law

Locations

With offices in Texas, Florida and Colorado and attorneys licensed in Texas, Florida, Colorado, Arkansas and Oklahoma, Fears Nachawati is dedicated to attaining the best possible solutions for our clients’ business and personal needs. We strive to be professionals who are creative, empathetic and reliable.

All Areas Served

We Can Help

Contact Fears Nachawati today

Free Consulation

Live Chat (Online Now)