I advise my clients to stop paying on credit cards once they decide to file a bankruptcy case. What happens if you stop paying them? You can expect to receive collection notices from the credit card company for about three months. Your account then gets sold to a collection company. The collection company will attempt to collect the debt for about three months. Finally the debt is sold to a lawyer. It takes the lawyer about three months to obtain a judgment from court. The judgment can lead to garnishment and a judgment lien on real estate.
So why do I tell clients to stop paying credit cards? To eliminate unnecessary spending prior to filing bankruptcy. Clients use their income to pay for the fees and costs of bankruptcy. Getting the bankruptcy case filed stops all debt collection activities. Stop paying credit cards helps to get the bankruptcy case filed quicker.
