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If you’re among the thousands of North Carolinians preparing to file for bankruptcy protection, there will probably comes a time when you ask yourself the following question: What bills should I continue to pay if I’m filing for bankruptcy? This is actually a question that has many different answers, as many debts are able to survive the Bankruptcy Code. It also depends largely on the Chapter you are filing. With bankruptcy laws being complex and detailed, it’s important we look at this issue a little closer.
Bill Categories and the Bankruptcy Code
When you are preparing to file for bankruptcy protection, you have likely fallen behind you your monthly obligations. Most people are experiencing creditor harassment and constant calls from rude collection agencies who are demanding their money. Each category of bill has a different treatment under the bankruptcy code, so it’s important to look at each one individually when you are considering payments before filing your bankruptcy petition.
Rent: You should always do your best to pay this bill, whether you are preparing to file bankruptcy or not. When you are a renter, it’s important to keep your rent payments current, as there is an extremely limited automatic stay for renters under bankruptcy laws. If you do not comply with some very strict rules, you can still be kicked out of your apartment or rental home after completing the bankruptcy process.
Mortgage: This payment will depend on which Chapter of bankruptcy you are filing and if you are planning to keep your home. If you think you will be better off walking away from your home, it may be tempting to keep that mortgage payment and apply it towards other bills and costs. However, the only way to truly determine if you should continue paying your mortgage before filing for bankruptcy is to consult with an experienced North Carolina bankruptcy attorney.
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Child Support or Alimony: You will always need to pay these obligations, regardless of your bankruptcy filing. The reason for that is because domestic support obligations are considered non-dischargeable under bankruptcy laws, so filing either a Chapter 7 or Chapter 13 bankruptcy will do nothing to relieve you from these debts. If you fail to pay child support or alimony, the debts will ultimately be enforced by North Carolina’s probation department, causing your paycheck to be garnished or landing you in jail.
Utilities: This is a tricky one. If you can afford to pay this bill, you should do so. Until you actually file for bankruptcy, the longer you put off paying this bill, the more likely it is that the utility company will shut off your service for non-payment. The last thing you need to deal with, on top of all your financial stress, is your family being forced to live in the dark. While you are allowed to discharge this debt under bankruptcy, you should also be aware that the utility company may force you to pay an abnormally large security deposit for any future services.
Homeowners Association Dues: There is a very clear rule on homeowners dues under bankruptcy laws. Any dues that you have amassed before filing for bankruptcy are considered dischargeable, but any obligations after that point must be paid. What that means is if you file for bankruptcy, your back dues go away, but any future obligations to pay dues remains intact.
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What should you take away from all this? There is a lot of debt relief available to you when filing for either a Chapter 7 or Chapter 13 bankruptcy in North Carolina. However, some debts will remain even after the process is complete. As always, your best bet is to consult with a local North Carolina bankruptcy attorney who can give you the necessary advice on how to handle your debts and bills.
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