Automatic Bill Payments from Your Checking Account and Bankruptcy Don’t Mix Well Together

28 Jan Automatic Bill Payments from Your Checking Account and Bankruptcy Don’t Mix Well Together

No doubt, the convenience of having recurring monthly bill payments paid through an automatic deduction from a checking account is an attractive idea for busy people. After all, when the car payment is made without the need for even thinking about it, isn’t your time freed up to think about other things? It seems like a wonderful concept.

However, that’s exactly the problem: automatic payments allows a person to stop thinking about financial matters, and that subject issomething a financially stressed person needs to think about, even if it’s painful to do. Consider that for many, a contributing cause of their money problems has been not spending enough time formulating a budget or reacting to changing circumstances.

Having a house or car payment, or fitness club payment, or snowmobile or boat payment, automatically deducted from a checking account, deprives the consumer of the important opportunity to think, at least for a minute, about the wisdom of the expenditure. The payment occurs like a sort of Stealth fighter plane flying under the radar of awareness. Enough of these Stealth payments can wreck a monthly budget, and no one even realizes it’s happeninguntil there’s an explosion.

Automatic payments also deprive a person of control over how much of their money is used to pay what bills, at what time. What if the house payment cannot be paid because the fitness club and boat payments have been automatically deducted from the checking account the day before yesterday?

And, if you’re considering bankruptcy, automatic payments are especially inappropriate. After bankruptcy, some bill payments are sure to disappear, either through a bankruptcy discharge of the underlying debt, or through a chapter 13 plan’s provision to pay the debt. Don’t let the creditor get payments it doesn’t deserve, just because it takes awhile to stop the automatic payment.

Take control of your finances, whether you intend to file for bankruptcy or not. Pay your bills yourself, preferably by check so you confront what you’re spending and why you’re spending it. Pay the bill only when you think about all your obligations, and only when you decide that it’s a good idea to pay it at this particular time. After all, it’s your money — treat it like you own it, and remember you had to sweat to get it.

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Craig W. Andresen is a consumer bankruptcy lawyer in Bloomington, Minnesota, with 22 years’ experience in consumer and small business bankruptcy cases. He is the Minnesota chair of the National Association of Consumer Bankruptcy Attorneys, and is a member of the Minnesota State Bar Association’s Bankruptcy Section. Mr. Andresen lectures often on the topic of consumer bankruptcy at local and national legal seminars.
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