Should I stop paying my credit cards?

[nsupanda]

My husband and I plan on filing for Chapter 13 this month or next, as soon as we get all of our paperwork together. We owe over $50,000 in credit card debt.

I have never been late on a payment, nor have I missed a payment on anything before. My problem is that I'm paying over $1400 a month on credit card minimum payments, and in all reality, I can only afford $400 when I look at my budget. The only way I've been able to pay the minimums each time is because between me and my husband, we get 4 paychecks a month so I'm paying as we get paid. However, it's really hard to do this because here lately we've been surviving off of ramen noodles and water (no joke). I hate putting my kids through this when it's all our fault. They don't deserve to live this way.

My question is: since I plan on filing bankruptcy this month or next, would it be alright to just stop paying now? I could really use the money for other things that we really need... but I don't want to make the trustee mad or anything (I'm still really stupid on the whole bankruptcy thing, will the trustee even care?). Would it be best to keep paying the minimums until I file? I can make the minimums if I absolutely had to, it will be a very very hard month for us, but I seem to get by somehow every other month...

[BKDefender]

Generally people stop paying their credit cards and use that money to prepare to file bankruptcy. Most of my clients pay me using money they normally would have paid to their credit cards or other unsecured debts.

The trustee doesn't get mad because you didn't pay your credit cards - after all, the trustee is a bankruptcy trustee who sees people day-in and day-out who couldn't pay their credit card bills.

Take the money from not paying your credit cards and fill up your pantry, buy a 6 month car insurance policy, or put it in a Roth IRA before filing. The time to begin planning for your financial recovery is now, and that includes making decisions that benefit you financially, not that benefit your creditors at your expense.
Pay yourself first, you're worth it.

--William

[nsupanda]

Generally people stop paying their credit cards and use that money to prepare to file bankruptcy. Most of my clients pay me using money they normally would have paid to their credit cards or other unsecured debts.

The trustee doesn't get mad because you didn't pay your credit cards - after all, the trustee is a bankruptcy trustee who sees people day-in and day-out who couldn't pay their credit card bills.

Take the money from not paying your credit cards and fill up your pantry, buy a 6 month car insurance policy, or put it in a Roth IRA before filing. The time to begin planning for your financial recovery is now, and that includes making decisions that benefit you financially, not that benefit your creditors at your expense.
Pay yourself first, you're worth it.

--William

William, thank you for your posts. I've seen some of your replies to people and it's just really appreciated. It's nice to have a real attorney on these boards to help some people out. Do you realize how scared some of us are? I can only speak for myself, but this part of my life is the scariest and worst thing I've ever been through. I really feel like I'm in hell, and it's all my fault. Bankruptcy is a scary thing for me to face, but I'm really trying to think more positively that things will only get better.

Thanks again for your posts and/or replies!

[frogger]

William, thank you for your posts. I've seen some of your replies to people and it's just really appreciated. It's nice to have a real attorney on these boards to help some people out.

I agree. Well thought out and polite opinions to help people. We need more people like William not only on the board, but in the real world.

Thanks William.

[BKInLA]

I'm just like you, struggling but still managing to churn out the minimum payments each month. I think we're the favorites of the big banks because we're pretty much hostages to them...that is until we start looking into the discharge train!

My first two payments missed were last Friday and up until the actual day I felt a bit nervous. But by the end of the day I realized, I had some extra cash to make my mortgage payment on time and that felt great!

[flyinbroke]

The extra cash thing hooked me. I bought groceries, gas and pet food with cash instead of having to use cards. Now that I owe tax money, I have stopped paying all but my CU cards/loans (cross collateralizaiton issues), a furniture store (bought a new mattress in December) and Bill Me Later (pet meds and new tires). Two student loans come out of forebearance in April. Love having money at the end of the month...granted the IRS will steal all of that and some will go to a lawyer now but I have to admit...turning off the phone and reveling in using cash is awesome.

[researchmode]

I'm in the same boat. I've never been more than six days late with a payment in my life and that was during our move!

I'm terrified of those first few creditor calls and mean notices in the mail.

We're in FL, are under the median income, and are filing in April when we get our tax refund. Between now and then I could definitely use that extra $600 a month, you know!

Thanks for asking this question. So far I'm really getting that I'm not alone, my questions aren't stupid, and that's worth a lot to me.

~ResearchMode
A mom on the Gulf Coast of Florida in process of filing CH7 and blogging about it:
(link removed)

[wantout]

You sound like me, take that moths CC payment and find a attorney, use it for a retainer, then pay the attorney his fee as you can each month.

You will get calls, how many and how often vary, but it will happen until you file, then the calls stop.

[HakunaMatata]

I'm in the same boat. I've never been more than six days late with a payment in my life and that was during our move!

I'm terrified of those first few creditor calls and mean notices in the mail.

We're in FL, are under the median income, and are filing in April when we get our tax refund. Between now and then I could definitely use that extra $600 a month, you know!

Thanks for asking this question. So far I'm really getting that I'm not alone, my questions aren't stupid, and that's worth a lot to me.

~ResearchMode
A mom on the Gulf Coast of Florida in process of filing CH7 and blogging about it:
http://chapter7beforeandafter.blogspot.com/

No need to be fearful. The first few mail notices I received were basic reminders (followed by a heavy dose of universal default excitement -raised rates, closed no balance cards). They get a bit more aggressive...if you read them. Collections folks are simply trying to make a living. They are doing their annoying debt dialing job. You don't have to answer each and every phone call. It's recommended confirming your identity with a creditor and stating you can't pay at this time. You don't have to give them your life story or invest precious time. I never answered a call (and my timeline was similar to your timeline). I did return one call to a Mister Payne (clever name, eh?). He couldn't locate my information!

I had never missed a payment prior to deciding to let my house go. I continued to pay most CC creditors (against my attorney's advice) due to semi-recent charge fears. Don't follow my lead. If you're filing, STOP PAYING. Don't waste your money. If you feel the urge, ask yourself...would I be willing to pay $600/month to avoid mail (that I don't have to read) and phone calls (that I don't have to answer)?

[researchmode]

If you're filing, STOP PAYING. Don't waste your money. If you feel the urge, ask yourself...would I be willing to pay $600/month to avoid mail (that I don't have to read) and phone calls (that I don't have to answer)?

Brilliantly put! That was... wow. Isn't it interesting how simply rephrasing something makes it make sense?

Thanks.

[HakunaMatata]

Brilliantly put! That was... wow. Isn't it interesting how simply rephrasing something makes it make sense?

Thanks.

If you were willing to pay this monthly amount, I intended to ask for your mailing address and phone number!