Auto Payments

[Bankruptcy20]

Has anyone thought thru this issue before?

I have direct auto-payments to creditors coming directly from my checking account for the monthly minimums. I am considering IF and WHEN to close my checking account to another bank (one which is not affiliated with any of my creditors).

I can either:

1. just close my checking account, and have all the auto payments fail thereafter (don't know if this increases any bounced check or new liability to me then)
2. call each creditor and tell them to stop auto payments (but then, am I not tipping off each creditor? and cant they later allege that I had premeditated BK even way this earlier?)
3. do both, call each creditor to cancel autopay, and then cancel the checking account (perhaps overkill, but the cleanest way)

I'm inclined to #3, but I'd welcome second opinions/ experiences from anyone who did all this and ended up filing Chapter 7 later on.

[Bankruptcy20]

Sorry, I just realized the title and text can be confusing. This is not related to AUTOMOBILE payments, but rather relates to AUTOMATIC monthly minimum payments. If a moderator can change the topic head, that may save some people some time who are searching for car stuff! Thanks

[katie]

From experience - I would do choice #3.

Call each creditor and just tell them you will be changing checking accounts (it's really none of their business why) and to stop auto-payments. Then close the checking account and open a new one at a different bank.

Bank of America (whom we owed money to) wouldn't stop auto-payments of theirs and it was a mess. They ended up getting $300 from us which of course they wouldn't refund even though there was a stop payment order. I thought I was covering my bases, but apparently not enough.

Good luck,
Katie

[jessegirl]

I would probably do #3 also.

When you call the creditors to stop them from taking out the payments. Just tell them that you are closing your checking account and thats it. If they ask if you are opening up another one, say yes, but not sure where yet and I would like to just start mailing in my payments. Keep it short and sweet.

[Logan]

When I decided to declare I stopped all Automatic Payments and opened a new checking account with a bank that I had no relationship with. If you have a credit union they can cross-collateralize so you definitely want to take money out of any CU accounts you may have if you have credit with them.

Logan

[StartingOver08]

Exactly, #3 is the best way.

[Bankruptcy20]

Thanks for the clear responses. Have either or others of you considered also taking a fourth step, which is to CLOSE the credit cards as well as you are stopping the automatic monthly minimum payments? Does it look better, worse, or doesn't matter?

Thanks

[katie]

It makes it worse if you close the credit card accounts, because your credit score is based on (among others things like paying on time) how long you have had lines of credit and amount of credit used. When you close these accounts, particularly the ones you have had a while, your score will drop and will also lower your percentage of amount owed versus total credit lines.

Learn from my mistake here as well, don't tell them of your intention to file Chapter 7, or they will close it for you and then all the others will follow suit.

[Bankruptcy20]

Katie, sound advice and very much appreciated.

I am a bit confused as to your comment, as if I am to ever file Chapter 7... isnt my credit going to get so demolished then, that it doesnt matter these extra few months of being opened or whether I closed them or they did? I thought once the petition is filed, most CCs close cards anyways, and the Chapter 7 filing and process would ruin all my long years of good credit...

I did, however, hope that there would be a marginal benefit in "being honest", to be recognized by trustees or CCs that I raised my hand early, cancelled all the automatic payments, cancelled the cards, etc, while I tried to get my house in order. Maybe I'm missing something.

Thanks all.

[hamburgervol]

Great topic, I was getting ready to ask the forum this very question. I think banks will also stop payment for a fee.

My problem is my mortgage (which we plan to reaffirm) and one of my unsecured debts are the same company. I want to stop the autopay on the CC not the mortgage. Will the CC department tip the mortgage department?

[katie]

The way it was explained to me is as follows: Your credit score will drop let's say when the account closes because of greater margin of credit used and shorter average term of credit lines open. Okay, then once bankruptcy happens, your score drops again.

Probably, not a great deal of difference in the big scheme of things, but I guess depends on everyone's unique situation and credit history. Ours was 800+ not so very long ago. I've been to afraid to check our credit after filing and was hoping to wait until discharged to make sure everything went as it should have.

[katie]

hamburgervol,

Our situation was similar to yours. We had 2 checking, 1 savings, mortgage, HELOC, motorhome and credit card all with Bank of America. You can read from my earlier posts, but to summarize, they were not willing to help at all on stop payments (they were free for us), they always messed them up like putting them on the wrong checking account for example and the payment would go through anyway - then refused to refund money because we "owed it to them". We are keeping our house and HELOC and surrendering motorhome, discharging credit card.

We completely closed out all checking/savings accounts with them just so they would stop taking money out of our accounts. It was a headache!

[hamburgervol]

hamburgervol,

Our situation was similar to yours. We had 2 checking, 1 savings, mortgage, HELOC, motorhome and credit card all with Bank of America. You can read from my earlier posts, but to summarize, they were not willing to help at all on stop payments (they were free for us), they always messed them up like putting them on the wrong checking account for example and the payment would go through anyway - then refused to refund money because we "owed it to them". We are keeping our house and HELOC and surrendering motorhome, discharging credit card.

We completely closed out all checking/savings accounts with them just so they would stop taking money out of our accounts. It was a headache!

I guess mine differs a little from yours in that my checking is completely separate bank than My Mortgage/CC.

[Bankruptcy20]

Katie, on thing I did was to subscribe to one of those 3-on-1 credit score monitoring, it's only $15-$20 per month and they send you an email to any changes to your credit profile. As you say, you are waiting until after discharge, but if you wanted to, you could monitor it compulsively like I am.