Which Creditors Should I Stop Paying?

August 11, 2010

By: David M. Serafin

When deciding to file for bankruptcy in Colorado, it is important to know which creditors to stop paying.

First, do you have a mortgage or car loan?  If so, such is a secured debt with the collateral being the underlying asset.  You’ll need to make all monthly payments on secured debts for property in Colorado which you intend to keep.  Otherwise, absent regular and timely monthly payments, the house can be foreclosed and the vehicle can be repossessed.  

Additionally, in Colorado, you’ll be required to catch up on past due payments for any secured debts (assuming you intend to keep the underlying property) in a chapter 13 payment plan by making payments to through the bankruptcy trustee.

On the other hand, there is simply no reason to continue making payments on unsecured debts, such as credit cards and medical bills, as these will usually be mostly or fully discharged in a Colorado bankruptcy (depending on the chapter of bankruptcy).

Regular monthly bills, such as for utilities like gas and electric, cable, phone, internet, etc. are typically not part of a bankruptcy, unless you are significantly behind when filing for bankruptcy (in which case, you’ll only receive a bill for services provided after the bankruptcy is filed).  I have bankruptcy clients in Colorado who regularly have their essential utilities shut off without notice, whereby we work with the service provider for my client to slowly catch up on the missed payments.    

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