What happens to automatic payments in bankruptcy?

When you file for chapter 7 bankruptcy protection, you should be prepared to pay some or all of your bills the old-fashioned way: either in person, or by mail. Creditors will cancel automatic withdrawals from your bank account because they are not allowed to collect on your debts during the case, unless they get permission from the judge or you sign an agreement to reaffirm that debt.

If a creditor does withdraw money after you file for bannkruptcy, you are entitled to it back, but that can require expensive legal motions and filing to achieve. While it may be worthwhile to go after that money, it can be easier to prevent that issue from coming up by cancelling any automatic withdrawals yourself before the bankruptcy petition is filed.

Get a free consultation about your debt situation by calling Selby Legal.