If you are considering filing for bankruptcy in Texas you may have heard that it is good idea to stop making payments in the months leading up to your filing. Don’t do this. Purposely defaulting on your payments prior to filing for bankruptcy could prevent you from getting the help you need. Here’s why:
Credit and Collections
Although some may suggest that stopping payments to loans prior to your case is a good idea, the first thing that will happen is a surge of debt collection calls. When you stop payments your lender will take action to collect, which could include reporting negative information reported to the credit bureaus and even garnish your wages or repossess property. Bankruptcy is a tool that can stop all of these consequences while wiping out your debts, don’t compromise your situation by instigating additional problems with creditors and your credit report.
Suspicions of Fraud
The bankruptcy court does not like to see drastic changes in your financial profile in the few months leading up to your filing. Any significant increase in your debts (usually from additional purchases) could be viewed as suspicious by the court. Purposely defaulting on your debts could also be viewed in this manner and could jeopardize your case. Obviously, there may be instances in which you cannot afford to keep up with your payments prior to filing, but you should make efforts to avoid defaulting on purpose whenever possible.