Talked to a BK atty - told me to stop paying my credit cards?!?!

[pamzam70]

What is the name of your state (only U.S. law)? IL

So I called a BK atty today, and his assistant asked me a bunch of questions about what I owe on our home, our cars, what kind of debt we're looking at...Told her we use our credit cards to sometimes pay for groceries (OUCH), and we sometimes pull out cash advances to pay on other things (mortgage, cards, etc). She told me that since I'm considering BK, that I should first STOP using my cards. She said, "Obviously, if you don't have the money to buy groceries, then you dont' have the money to pay your cards..."

Told me that it takes a short while for the card companies to start hassling me to pay the payments. In the meantime, we'll get the BK rolling...

I have an appt with her and my husband, to sit down and have her discuss all of our options...but to intentionly STOP PAYING MY CARDS is a little disturbing to me...

Any suggestions???

Also, she wanted to know what we owe on our home and what we owe on our HELOC (considering the 2nd mortgage). Can you please explain to me, what happens if I don't have enough equity in the home, or what if I do? I don't want to lose our house!!!

Thank you!!

Pam

 

[Gregeney]

Why would you pay on credit card balances that will soon be $0? You could likely use that money for something more helpful. Like your attorney fees.

Keeping your house depends on your ability to make the payments AND your other living expenses. It may also depend on whether or not you are behind on your payments at the time of filing.

 

[bigun]

It's SOP for a lawyer to tell you to stop paying all debt you wish to discharge for the reason Gregeney posted.
But, I believe their is another important reason. You have to see if you can support yourself post bk. If you still can't pay for the basic necessities without using credit cards then, you have a problem that bk can't solve. I'd suggest you not file until you're certain you can support yourself post bk.

 

[Some Random Guy]

Cash advances on credit cards are a sign of bankruptcy fraud, as people try to run up their balances before filing BK. If you have been using cash advances within the last 6 months, spent a few minutes determining what the money was spent on and see if you have any proof of that.

don't throw out old bills and receipts until you know they won't bee needed for the BK process.

 

[Gregeney]

A question for the attorneys or other preparers of petitions: with BAPCPA, do you see any potential problem in advising clients to stop paying debts upon which interest accrues? The specific part of BAPCPA that is pertinent to my question is the part that forbids advising a client to incur debt.

Personally, I just word that advice very carefully but I continue to advise the best thing for the client.

 

[Ladynred]

Continuing to pay credit cards when you're going to file BK is just money down the toilet. As stated, you'll need the money to pay your lawyer and to live on. If you're using credit cards for daily necessities, you are clearly in way over your head, and you need to reassess your entire financial picture. Stopping payments on your credit cards is not going to be a problem, any collection calls you *might* get should be directed to your lawyer once you retain one.