Keep Paying?

[KMc]

Hello and thank you in advance for answering my question here... I am in serious debt and I need to file chapter 7... My thinking is should I stop paying my creditors now and save that money? There is no way I can pay all that I owe and I know filing is is the only way out... I owe more money than I make in a year... should I stop paying except my car loan which I just purchased in January?

[justbroke]

Yes, you should stop paying your creditors once you realize you are insolvent, are borrowing from your 401(k), are using credit cards as your primary source of income (to survive) and filing bankruptcy soon. If you intend to keep the car, then keep paying for the car. Hopefully you haven't taken many (or any) cash advances fro the cards. If you have taken cash advances, hopefully you have been paying at last the minimum payment on those and it has been at least 90 days since you last took a cash advance.

If you plan to file yourself (Pro Se), please obtain a guidebook such as Nolo's Guide to Filing Chapter 7. It doesn't appear as though you have many assets, except a car, as you didn't mention a house. Your 401(k) and/or IRA are safe, so don't start using them to pay your credit debt as you're just robbing your future to pay for the now.

If you plan to use an attorney, the savings from not paying your credit cards over the next few months may be enough to pay an attorney.

Welcome to BKForum.

[KMc]

Thank you for the advice! My worry is that my car is through Capital One and I have several cards with them... Will that hurt my chances of keeping my car? I fully intend to keep paying but do you think they will repo my car if I don’t pay their catfs I have with them?

[justbroke]

Capital one can't "cross-collateralize" your car with your credit cards because they don't enjoy the special privileges afforded to credit unions. You can discharge the credit card debt and keep the car. However, CapOne may ask you to reaffirm the car debt by having you sign a reaffirmation agreement. Whether or not it's a good strategy to sign a reaffirmation is lender specific. I'm not sure if CapOne actually "requires" them, but they may ask.