Automatic Payments from Checking Acct

[RickInMich]

One other question I have. All of my payments are currently automatically deducted from my checking account: mortgages, car lease, credit cards. I assume I must stop the automatic payments when I file -- or actually before since it seems I need to stop paying now.

But since I plan on keeping the mortgages and auto lease, must I stop those automatically, too? Do I need to close that checking account altogether? I guess basically I'm thinking if I leave that checking account open, what would stop my credit cards from trying to automatically deduct from there?

Rick

[lrprn]

But since I plan on keeping the mortgages and auto lease, must I stop those automatically, too? Do I need to close that checking account altogether? I guess basically I'm thinking if I leave that checking account open, what would stop my credit cards from trying to automatically deduct from there?

This is a tough question because there's variability about how automatic payments work on the creditor side and the bank side.

You can work with some banks to ensure that only the automatic payments you wish can be taken out and others will be refused. Some won't take on this responsibility or make mistakes and allow the transaction anyway - frankly it's best to handle this directly yourself.

First thing is you MUST send registered, return receipt letters removing permission for the automatic withdrawal to every creditor that is currently withdrawing funds from your account. You can also remove this permission online or call the creditor too, but too many companies say that they didn't see that you changed the permission and getting the money back after it's been withdrawn is very difficult and usually needs a lawyer's help.

One other potential issue is the timing of the auto-withdrawals, particularly the big ones like mortgage and car payments, in relation to when you are filing. Lawyers will recommend that you have as little in your account as possible on filing day. This is the amount listed on your forms when you file, and some trustees request copies of your account on filing day.

If you have money in the account on filing day to pay a creditor but it hasn't been auto-withdrawn yet, then that money belongs to your trustee even though you have it earmarked to pay your mortgage or car lease.

Since this timing when money is coming out of your account can be hard to control, most filers stop all their auto-payments several months before filing and go to money orders or online bill paying if your bank has that for the last month to be in total control of what is coming in and out of your account. This is the most reliable way to have as little in the account on filing day as possible.

Sorry this probably isn't as simple as you would like, Rick - just one of those changes that sometimes is necessary with filing.

[Boscoe]

Rick - my recommendation is to leave the mortgage and car loan stuff completely alone. I assume you are reaffirming both and are keeping both. Leave those be, and any auto payments for utilities too.

But the credit cards, stop those now. Anything you choose to pay, you can send via the mail.