In some chapter 7 New York bankruptcies it’s common for debtors to still be earning an income sufficient to pay some of their creditors if they choose to. Often it’s a necessity like a car payment or a mortgage payment. However, some debtors suddenly encounter difficulties making their payments, particularly online. For example, automatic withdrawal stops working, or creditors stop sending bills with the return address enclosed.
Do creditors intend to force debtors into default? No. More likely, the creditors in these situations are trying to abide by the Bankruptcy Code’s automatic stay by deactivating convenient features and standard payment plans. This can be a hassle for debtors, but it shows that the creditor is abiding by the law.
Debtors who want to maintain their payments to their creditors despite their bankruptcy have a few options at their disposal:
- Draft a check or money order. Most demand accounts still give their depositors checks for personal use—not that they’re used that much anymore—and it shouldn’t be too much of a difficulty to obtain a money order if necessary.
- Negotiate a reaffirmation agreement. A reaffirmation agreement is a legal document that allows the debtor to promise to repay a debt so long as it survives the discharge order. Reaffirmation agreements require the signatures of the debtor, the creditor, and the debtor’s bankruptcy lawyer to go into effect. The bankruptcy judge will sign a reaffirmation agreement if the debtor is not represented by counsel. The reason for these extra signers is that the Bankruptcy Code seeks to ensure that debtors do not promise to repay a debt they cannot realistically repay.
One thing for debtors to do before filing bankruptcy is to see what debts they might want to pay and how they’ll go about paying them. Ensuring timely payments might require more work than is usually necessary for debtors outside of bankruptcy.
After bankruptcy, however, it’s possible for debtors to continue paying down debts even if they’ve been discharged. Sometimes this is necessary, such as when the debt is secured by a lien on a piece of property. Nonpayment will result in foreclosure of a home or a seizure of a vehicle. It should be possible to arrange a payment system in that case.
Some debts survive bankruptcy, reaffirmation agreement or no, and it’s important to ensure those are paid, if necessary or desirable.
For answers to more questions about bankruptcy, the automatic stay, effective strategies for dealing with foreclosure, and protecting your assets in bankruptcy please feel free to contact experienced fair debt collection practices act Bruce Weiner for a free initial consultation.