Hello, this is Jeff Kelly Today is December the 7th 2019. And today I want to talk about automatic payments that come out of your bank account.
You know, I can understand why automatic payments sounds like a great idea. You don’t have to worry about it, just set it and forget it. But for somebody who who’s having debt problems, this is a terrible idea. And the reason why is because the creditors that are are going to push the hardest to get automatic payments coming out of your check are probably the ones that you’re not going to pay if you get into serious trouble. So, you know with things like your mortgage company, house payments, number one, but let me give you an example of one that you really don’t want to have automatic payments on. And that would be your second mortgage. If you get into serious trouble on your first mortgage, they’re going to foreclose on your house, okay? So, first mortgage top priority. Second mortgages, are they going to foreclose on your house? The answer is almost never. And the reason why is because in order for a second mortgage to foreclose on your house, they’ve got to pay the entire balance on the first mortgage first, before they can foreclose. So most situations, second mortgages, you know, we see some money owing maybe, you know, for example, $30,000 on a second mortgage, and $150,000 on the first, well, no bank in their right mind is ever going to spend $150,000 to try to recover 30 it’s just too much of a risk with respect to a house. I mean, there might be a rare situation where there’s just tons and tons of equity. It might make it attractive, but as a general rule, no.
Credit card payments, medical bills, don’t do this stuff on automatic payments, I’m against that. Also, you know, even with your first mortgage, when you’re writing out a check every month or having it sent directly by your bank, you’ve got a rock solid record of a check front and back showing exactly where that money went to. I really personally prefer those. I mean, that is like solid court evidence that just can be submitted on the face. So, as a general rule, when it when we’re talking about automatic payments, it’s really a bad idea.
Another thing, let’s say you, you have an automatic payment set up out of your checking account, and we file bankruptcy and we’re going to wipe this creditor out completely in the bankruptcy but they know your routing number and they know your account number.
Well, you know, technically, they’re not supposed to be yanking money out of your checking account after the bankruptcy cases filed and after you tell them to stop, but you know, what’s going to happen? They’re going to do it anyway. And are you going to spend, you know, 500 to $1,000, paying me or some other attorney to set up a special court hearing to try to get that money back? No, they’re not. They know that. So they’re just going to take it. So if you’re in a situation where you’ve got a ton of automatic payments coming out of your checking account every month and you’re about to file Chapter 13, or Chapter 7, you really need to get a brand new bank account before you file and I know what a nightmare it is to get a brand new bank account, but you gotta do it anyway. Because you don’t want to get into a situation where you file you think you have everything lined up, and then doggone it right before your rent is due, or your mortgage is due or whatever, some creditor has access to your checking account and they yank money out.
It is so much better to if you’re going to be filing Chapter 13 or Chapter 7, have a bank account set up that nobody knows your routing number or your account number. So that that way, your case can just sell along so much more smoothly.
If you have any questions related to Chapter 13 or Chapter 7, and want to set up a free consultation with my office, just give us a shout at 706-295-0030. I’ve got office locations in Marietta, Kennesaw, Douglasville, Dallas, Georgia, Dalton, cartersville, and Rome. You can also check out my website www.kellycanhelp.com.
I’ve written a book on Chapter 13 and Chapter 7, and you can download a free copy of that from our website. Thank you very much. Have a great weekend.