Will Automatic Drafts With My Bank Stop After I File Bankruptcy?
With the ever improving online banking that is available through most banks, it is possible to pay almost all of your bills without ever stepping foot outside of your home. There is no doubt filing bankruptcy can impact every situation of everyday life, but what about paying your bills? What happens if you have everything automatically drafted out of your account each month? Will that continue?
It depends. If your home mortgage or car payment is automatically drafted prior to your bankruptcy filing, then during the duration of the bankruptcy the mortgage company or vehicle creditor will likely stop automatic drafts and require you to manually pay your bill, or will only accept a mailed-in payment. When you file bankruptcy there is an “automatic stay” that goes into effect which states that your creditors cannot contact you for a payment. Many lien holders (such as your mortgage company or vehicle creditor) would rather play it “safe than sorry” and will code your account as being in active bankruptcy and will not automatically draft payments. In some cases, the creditor will not even send monthly statements. If you wish to continue receiving monthly statements, contact the creditor to let them know. They may require you to send in written permission from your bankruptcy attorney, which is common practice with creditors.
If you have your utilities automatically drafted from your bank account, then they will likely continue. If your automatic drafts are for credit cards and other debts, once you file the bankruptcy they should automatically stop since the debt is included in the bankruptcy. Those creditors should not be receiving payments at all – whether automatic draft or otherwise – due to the automatic stay.
Therefore, after you sign your petition and your bankruptcy is filed, it is imperative to make your monthly payments on your secured debts. If your payment is normally automatically drafted, do not think something is wrong in the transaction and sit and wait for it to happen. Go ahead and contact your creditor to find out the best way to make the payment (whether they will accept the payment over the phone or if you will have to mail in your payment). Discuss any confusion you may have with your attorney. Your bankruptcy is one step towards obtaining your financial freedom; you do not want to file bankruptcy and then become behind on your vehicle or mortgage due to the fact that they no longer just took their payment like they were before your bankruptcy filing.
