Clients often wonder what bills to pay in the time leading up to the time for filing bankruptcy. Usually, they wonder if they need keep paying credit cards, car payments, and mortgages and other bills.
The following list is comprised of things that I tell folks to pay in the time leading up to bankruptcy and why:
1. Child support. Well, you go to jail if you don’t pay it. Your kids have to eat even if it means that Citibank is not going to get its minimum payment. In short, it’s the law and it’s the right thing to do. Pay your child support (or alimony). If not, you’ll need bail and child support money.
2. Food- starving is just no good.
3. Utilities- Besides the obvious the reasons to pay the utilities, there are other considerations- if your utilities are turned off you’ll have to give a deposit next time you sign up for them. There are also fees associated with reconnection. It will cost you even more money in the long run if you don’t pay the light bill. I’m not talking about charged off old bills. I am talking about current utility usage. Besides, who really want to live in a house where the toilet does not flush?
4. Housing- you can’t live in a Visa or American Express- you can live in a house or apartment. Consult with me before continuing to make housing payments if considering bankruptcy. There are some situations, like when surrendering a house in foreclosure, where paying the house is not worth it.
5. Car payments- take what I just said about housing and repeat it here. Often times, because of the amount of the car loan, it just makes more sense to let the car go. Call me. I’ll be happy to help you make a decision.
6. Taxes- Uncle Sam can reach right in your pocket if you don’t pay. Some taxes can be discharged or given preferential treatment in bankruptcy. You’ll want to decide what your plan of action is before deciding for sure whether or not to pay taxes.
7. Everything else…