Should You Pay Any Debts During Your St. Louis Bankruptcy?

One of the biggest advantages of filing for bankruptcy is gaining the protection of the automatic stay. During the automatic stay, your creditors can’t take any actions against you, not even so much as a collection call.

And you probably won’t pay most of them directly ever again. If you file Chapter 13 they’ll receive money from your trustee as you work your plan, but you won’t be writing most of them any checks.

But there are some creditors who you will indeed want to pay, at least if you want to achieve certain outcomes from the bankruptcy process. For example, if you want to keep your house or your car, in most cases you’ll have to reaffirm these debts and continue paying these lenders, unless they’re already being taken care of under the terms of a Chapter 13 plan.

And of course, you have to pay your plan debt. If you don’t keep up with your Chapter 13 payment plan, your case can end up dismissed. This won’t be a problem during a Chapter 7 bankruptcy, which is over a lot faster and which simply wipes all of your eligible liabilities away.

There are other cases during which you may have to pay some debts. Some debtors can petition the court to make an exception in their case, allowing them to ignore the stay.

The creditors that do this are almost always the holders of secured debts which is, again, your house and/or your car. Landlords can do this too.

But they can only do this in a few instances:

  • Because you’re not abiding by the terms of your Chapter 13 plan, but your case hasn’t been dismissed.
  • If relief from the stay is harming the creditor unduly in some way, i.e., the secured property is rapidly depreciating.
  • You’ve continued to occupy a property you haven’t paid rent on, and your landlord needs relief from the stay so he or she can evict you.

Finally, you can end up paying any other debt during your bankruptcy if you choose to voluntarily reaffirm the debt. You might want to do this to keep a single credit card that you’ve had for a long time so you can reap the credit score benefits later. This might also be appropriate if you owe money to a member of your family, and want to repay the money to keep the family peace.

Just don’t assume reaffirming the debt is the only way to keep certain pieces of property. In some cases, making proper use of bankruptcy exemptions can be enough to protect you. Sometimes lenders will also allow you to retain your house or car without reaffirming, as long as you continue to pay.

Even if it looks like a given creditor has a compelling reason for you to continue paying their debt during your bankruptcy, you need to make sure you aren’t acting rashly. Always consult your bankruptcy attorney before giving any creditor any money.

After all, it’s hard to make a fresh start if you keep throwing good money at creditors who won’t give you any benefits in return.

See also:

How Bankruptcy Impacts Cosigners in Saint Louis

Why a DIY Bankruptcy is a Bad Idea

Missouri Bankruptcy: How are Secured and Unsecured Debts Different