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Paying Secured Debts After Bankruptcy Filing

11 June 2012

Patton & Southgate Client Information Only, this post is not a substitute for legal advice.  Please call with any questions.

The papers are signed, you have your case number and you’re on your way to your discharge.  Congratulations!  You’re on your way back to financial health.  You’re ready to make your next payment on your house or your car and now you can’t log on.  What happened?

The Automatic Stay, which protects you from creditors, can also make it hard to keep making your house and car payments after filing a bankruptcy.  Creditors are afraid sending statements could be a violation of your rights.  Each creditor handles their customers differently.  Some continue sending statements with a notice “for information only–not a demand for payment” and some seem to be trying to keep you from staying current by locking you out of their online bill pay or stopping their monthly statements.

To keep from falling behind, here are some tips to get your creditors to accept your payments and stay on track:

1)  Call their customer service number, tell them you intend to keep paying while you are in bankruptcy and ask them to re-establish your preferred method of payment.  If they say they can’t talk to you because you’re in bankruptcy, they’re wrong, but don’t argue with them.  Ask for a fax number or email where our office can send them an authorization to speak with you directly and resume sending statements.  Give us that information and we’ll make sure the authorization gets in the right hands.

2)  Some creditors refuse to let customers in bankruptcy use their online bill pay system at all.  If that is the case, talk to your own bank or credit union about setting up online bill pay through them.

3)  If you are in foreclosure and planning to keep your home, mail the payment to the office of the attorney handling the foreclosure until they tell you it’s safe to send it elsewhere.  Foreclosure and bankruptcy can complicate the process of getting your payments credited, so you want to be extra careful.

4)  Finally, there is always the old fashioned approach.  Make a copy of your latest statement or payment coupon (or ask our office to make a copy of it for you) and mail the payment to the payment address on the statement or to the bankruptcy address (if one is available) that received your bankruptcy notice.

Usually, the payment problem is a short term one.  Banks want your money, but even for them wading through bankruptcy laws can be a challenge.  They don’t want to mess up and get sued and that’s a good thing.  Once you have set up a method of sending payments, have filed a reaffirmation agreement or had your Chapter 13 plan confirmed, you should be able to count on having your payments credited as they were before you filed.

As one last piece of advice, be sure you can easy access proof of payments.  Banks make mistakes and I occasionally need my clients to provide me with proof of payments that banks mistakenly failed to credit.  For Northern Kentucky Chapter 13 filers, one of the responsibilities of filing is to keep track of post-petition payments.

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