Ch. 7--Creditors Debiting Checking Accounts

[concerned]

Can creditors debit your checking account if you file for a bankruptcy? How can you avoid this? Open a new account?

Someone told my husband to be careful if we file for bk because creditors can debit our checking account and the bank might try and charge us ridiculous fees. Any validity to this?

[hhou812hh]

You may want to delete the other 2 threads. I know HHM (rightfully so) hates clutter on this forum.

[StaciMM]

The automatic stay should stop all collection activity. Any creditor that proceeds after the BK is filed can get into BIG trouble. If you have a particular creditor in mind, it wouldn't hurt to send them a copy of your BK notice as soon as it is filed. The court will mail them one also, but that might be 5-7 days later. (Mine was filed on a Monday, the court notices were sent out on Friday.) Regardless of when the creditors find out, the stay starts at filing. BUT-if they take $$ from your account the day after you file, they're not guilty of doing it on purpose. You would get your $$ back but it might be a time consuming process.

I think the only times it is an issue is if there is cross collateralization. Do you bank w/ a credit union & are any of the debts that you're including in the BK come from that same credit union? I understand CU's do maintain the right to setoff funds from one account to pay another even during the BK process.

[concerned]

StacieMM--Thanks for the info. No, we don't use a credit union. We aren't behind on any payments either. I was just paranoid after hearing that they could debit your account. Our credit is good and we are making all our payments, but we still can't afford our house. That is why we are filing. It's all so new and scary to me. Thanks for the tips. I was concerned because our attorney advised us not to make our mortgage payment and since we have never done this I didn't know what to expect.

[StaciMM]

If you are 100% sure you're filing, then making your mortgage payment would be a waste. (You have the automatic stay to save to move elsewhere and generally nothing will really happen til you're 60 days past due I imagine.)