13 Apr Should I Stop Paying my Credit Card Debt if I Plan to File Bankruptcy
As credit card debt underlies many bankruptcy filings, it is not surprising that prospective bankruptcy filers want to know if they should stop paying credit card debt if they plan to file for bankruptcy.
At first blush, the answer to this question should be obvious – why should anyone “throw good money after bad?” However, I think that your decision in this matter should merit some thought.
First, you must recognize the consequences of stopping payments to credit card vendors, especially if you have always been current or substantially current. Once you miss a payment you can expect the phone calls to start in earnest. Collection phone calls can be distracting and bothersome, especially if you have young children in the house who enjoy answering the phone. If your delinquency goes beyond a few days, the tenor of the collection phone calls will change – credit card bill collectors can be quite nasty.
Secondly, note that delinquent credit card payments will damage your credit. This concern may sound silly if you are thinking about bankruptcy but realize that credit reports document history. A bankruptcy will damage your credit, but a bankruptcy + several months of delinquency will damage it more. Anyone looking at your credit file after bankruptcy will see both the delinquent payments and the bankruptcy, which may make recovery more difficult.
Finally, I can report to you that in my experience, a certain percentage of bankruptcy filers end up either not filing or delaying their filings. What seems like a certain course of action today may not seem like such an immediate need two weeks from now.
Now in many cases, a bankruptcy really is in your immediate future. And once you make that decision and consult with your lawyer about stopping payments, that may be the course of action you choose. However, until you are completely sure about your course of action, your decision about whether to stop paying credit cards should not be a casual choice.
Jonathan Ginsberg, Esq.
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