As a bankruptcy lawyer in Portland Oregon I find that a good part of my job decription is that of a financial planner and counselor. I work with my bankruptcy clients to budger, increase their cash flow and manage their secured and unsecured debt. Today I like to talk briefly about a common question that comes up...Do I still pay my bills when I have filed for a Chapter 7?
Now my typical bankruptcy lawyer reponse is "it depends". Seriously there are a lot of variations and this article should not substitute for a sit down with our firm or another bankruptcy law firm so an attorney can go over the exact details of your case. That said; typically you will not have to pay all your tier 2 bills either before or during the bankruptcy.
The first thing I should do however is define tier 1 and tier 2 'bills'. In my view a bill is an ongoing expense used to maintin your housefhold. This is dfferent then debt. Bills can include cells phones, water bills, cable, internet, etc. Things you need in your everyday life. These tier 1 bills you should continue to pay before, during and after your chapter 7 bankruptcy filing. You may need permission to9 pay these so please talk to your lawyer or court before you take any action. My little mantra for bill payment is that you'll need to pay for what you want to keep..."you like water? Pay your water bill. You like electricity in your home? Pay your electric bill. You get the idea.
Now what I call tier 2 bills are a bit different. These are your ongoing debt payments; credit cards, mortgage bills, medical bills, etc. When you have filed for a Chapter 7 these creditors are not able to contact you to solicit payment of these debt and you should not continue to pay on those bills. If you have an auto-draft from your bank account you may consider shutting that off. For se cured asetts like cars and mortgages there are very detailed rules regarding this but generally you don't keep making payments on these until the court allows the lender to start asking for the payments. It may be a good idea to keep making those payments to yourself so you'll be able to catch up any arrange that might arise during the process. Again this is a really important area to disucss with a bankruptcy lawyer; In general though you can stop making a good part of your unsecured debt payments before and during the bankruptcy. If you bankruptcy is done right then you wont likely have any further payments on some of those debt again.
Enjoy the day
