If you’ve decided — or are strongly considering — filing for bankruptcy, one of the most practical questions you’ll face is whether to keep paying your debts in the meantime. Paying debts before filing bankruptcy is not always the right move, and in some cases it can actually create problems for your case. The answer depends on what kind of debt it is, who you owe it to, and what you want to accomplish. This post walks through the key distinctions so you can make informed decisions in the period leading up to your filing.
The Short Answer: It Depends on the Type of Debt
Not all debt is the same before bankruptcy. The right approach depends on whether the debt is secured or unsecured, whether you want to keep the property tied to the debt, and whether the person you owe has a close personal relationship to you. Getting these distinctions wrong — especially in the months immediately before you file — can create complications your attorney will have to untangle.
The general framework:
- Keep paying secured debts if you want to keep the collateral (mortgage, car loan).
- Keep paying domestic support obligations (child support, alimony) — always.
- You can stop paying unsecured debts you intend to discharge (credit cards, medical bills, personal loans).
- Do not pay back family members or close friends before filing — the trustee can recover it.
- Do not run up credit card balances or take cash advances before filing.
Each of these deserves a closer look.
Debts You Should Keep Paying
Secured Debts on Property You Want to Keep
A secured debt is one backed by collateral — the lender has a legal right to the property if you don’t pay. The most common examples are your mortgage and your car loan. If you want to keep the house or the vehicle, you need to stay current on these payments.
In Chapter 7, if you stop paying a secured debt and fall behind, the lender can seek relief from the automatic stay and pursue the collateral even while your case is pending. If you want to keep the property, you will typically need to sign a reaffirmation agreement committing to continue paying the debt — and you need to be current, or close to it, for that to work.
In Chapter 13, the repayment plan can cure mortgage arrears over time, but you must continue making your ongoing mortgage payment throughout the case. Falling behind on the ongoing payment while your Chapter 13 is active can give the lender grounds to seek relief from the stay. The same applies to car loans if you are keeping the vehicle.
Bottom line: if you want to keep the house or the car, keep making those payments.
Domestic Support Obligations
Child support and alimony are not dischargeable in bankruptcy under 11 U.S.C. § 523(a)(5). Stop paying them and you will still owe them after your case closes. Domestic support obligations are also not stayed by the automatic stay — the other party can continue to collect regardless of your bankruptcy filing. Never stop paying child support or alimony because you are filing bankruptcy. It does not help you, and it will likely result in enforcement actions.
Debts You Can Generally Stop Paying
If you have decided that bankruptcy is your path forward, there is little financial benefit to continuing to make minimum payments on unsecured debts you plan to discharge — credit cards, medical bills, personal loans, utility balances. These debts will be eliminated in a successful bankruptcy case regardless of whether you paid them last month or not.
Many people continue paying these out of habit or a sense of obligation, but if bankruptcy is coming anyway, those dollars are often better saved for your attorney fees, the filing fee, or essential living expenses. Your attorney can give you specific guidance on when to stop based on the timing of your filing.
One important caveat: be thoughtful about how you stop. Stopping payments abruptly across many accounts at once — especially if you’ve been paying the minimum — will trigger collection calls and may result in lawsuits from some creditors. That is not necessarily a reason to keep paying, but it is something to plan for.
For more on credit cards specifically, see our post on when to stop using credit cards before filing bankruptcy.
The Preference Rule: Why Paying the Right Creditors Can Backfire
One of the most counterintuitive aspects of pre-bankruptcy financial planning is that paying certain creditors more than others before you file can actually create a problem. Under 11 U.S.C. § 547, the bankruptcy trustee has the power to “avoid” — recover — payments you made to creditors before filing if those payments gave that creditor more than they would have received in the bankruptcy. These are called preferential transfers.
The 90-Day Rule for Regular Creditors
For most creditors — a credit card company, a medical provider, a bank — the trustee can look back 90 days before your bankruptcy filing. If you paid one of these creditors a significant amount in that window while not paying others, the trustee can sue that creditor to recover the money and distribute it more evenly among all creditors.
This does not mean you cannot make any payments during the 90 days before filing. Routine minimum payments are generally fine. The concern is large, non-routine payments to specific creditors — for example, paying off an entire credit card balance the month before you file while leaving other cards unpaid.
The One-Year Rule for Insiders
The lookback period is much longer when the creditor is an “insider” — a family member, a close friend, a business partner, or someone else with a personal relationship to you. Under § 547, the trustee can recover preferential payments to insiders made up to one year before your filing date.
This catches many people off guard. If you repaid a loan from your parents or a sibling in the year before filing — even if you had genuinely borrowed that money and were doing the right thing by paying it back — the trustee can sue your family member to recover it. Your family member would then stand in line as just another unsecured creditor.
For a detailed explanation, see our post on paying family or friends back before filing bankruptcy. The bottom line: do not repay personal loans to family or close friends in the year before you file.
The Bankruptcy Code specifically addresses creditors who try to make debt non-dischargeable by arguing you borrowed money knowing you would not repay it. Under 11 U.S.C. § 523(a)(2)(C), there are two specific presumptions:
- Luxury goods or services totaling more than $800 charged to a single creditor within 90 days before filing are presumed non-dischargeable.
- Cash advances totaling more than $1,100 from a single creditor within 70 days before filing are presumed non-dischargeable.
(These thresholds are set by statute and adjusted periodically — your attorney can confirm the current figures.)
Beyond these specific presumptions, using credit cards after deciding to file — even for ordinary purchases — can give a creditor grounds to object to discharge of that specific debt, arguing you used credit fraudulently. Stop using credit cards as soon as you have made the decision to file.
What About Secured Debts on Property You Plan to Surrender?
If you are planning to surrender property — walk away from the house, give back the car — there is generally no reason to continue making payments on that loan. The purpose of those payments was to maintain your right to keep the collateral. If you are surrendering the collateral anyway, the payments accomplish little.
Stopping payments on property you intend to surrender will likely trigger collection calls and may result in the lender accelerating the loan. But in a bankruptcy context, the automatic stay will stop most of that activity once your case is filed, and the surrender of the collateral handles the underlying debt. Talk to your attorney about the timing of when to stop these payments relative to your planned filing date.
When to Talk to a Bankruptcy Attorney
The period between deciding to file and actually filing is one of the most consequential stretches in any bankruptcy case. Mistakes made during this window — paying the wrong people, using credit cards, transferring property — can complicate or even jeopardize your discharge. An early conversation with an attorney helps you navigate it correctly.
If you are thinking about filing bankruptcy in North Carolina, the right time to call is before you make major financial moves — not after. An attorney can tell you:
- Which debts you can safely stop paying now
- Whether any recent payments might create preference issues
- How quickly you can file and what you need to do first
- Whether Chapter 7 or Chapter 13 is the better fit for your situation
For an overview of bankruptcy options in North Carolina, see our main bankruptcy page. Duncan Law offers a free consultation — there’s no charge to ask.
Talk Through Your Situation With Duncan Law
Bankruptcy is fact-specific, and the right path depends on your income, assets, and what you’re trying to protect. If you’d like to talk through your circumstances with an experienced North Carolina bankruptcy attorney, Duncan Law offers a free consultation — there’s no obligation.
Frequently Asked Questions
Should I stop paying all my bills when I decide to file bankruptcy?
No — not all bills. You should continue paying secured debts on property you want to keep (mortgage, car loan) and domestic support obligations (child support, alimony). For unsecured debts you plan to discharge — credit cards, medical bills, personal loans — you can generally stop making payments, though your attorney can advise on timing based on your specific situation.
Will stopping credit card payments before bankruptcy hurt my credit?
Yes, missed payments affect your credit score. But if you have already decided to file bankruptcy, your credit will be affected by the bankruptcy itself regardless. Most people in this situation find that the credit impact of stopping pre-bankruptcy payments is not a significant additional concern compared to the bankruptcy filing. Rebuilding credit after bankruptcy is possible and begins once the case is resolved.
Can I pay off one debt before filing to keep that account open?
Paying off a specific credit card to keep it open is risky for two reasons. First, it may constitute a preferential transfer recoverable by the trustee if it was a significant payment within 90 days of filing. Second, paying one creditor while not paying others is exactly the kind of preferential treatment bankruptcy trustees look for. Additionally, you are required to list all creditors in your bankruptcy petition — you cannot simply omit one to keep the account.
What if I already paid back a family member recently?
Tell your attorney immediately and disclose the full amount, timing, and circumstances. Depending on how much you paid and when, the trustee may have the ability to recover those funds from your family member. Your attorney needs to know about it to properly advise you — concealing it is far worse than disclosing it.
Do I have to keep paying my mortgage if I’m filing Chapter 7?
If you want to keep the house, yes. In Chapter 7, keeping your home generally requires staying current on the mortgage and signing a reaffirmation agreement with the lender. If you are behind, Chapter 13 is typically a better fit because it provides a mechanism to cure arrears. If you plan to surrender the house, you can stop making payments, but discuss the timing with your attorney.
Can I use my credit card for groceries or gas right before filing?
Using credit cards for everyday necessities in the period before filing is generally lower risk than charging luxury items, but it is still not advisable once you have decided to file. Any credit card use after you have made the decision to file can potentially give a creditor grounds to argue that the charges were made without intent to repay. The safest approach is to stop using credit cards as soon as you decide bankruptcy is your path forward.
Does it matter which debts I paid in the last 90 days?
Yes. The bankruptcy trustee reviews payments made within 90 days before filing for signs of preferential treatment — large or irregular payments to specific creditors while leaving others unpaid. Routine minimum payments are generally not a concern. A significant lump-sum payoff of one account while other debts went unpaid is the kind of payment that may attract scrutiny.
Should I keep paying my car loan if I want to keep the car?
Yes. If you want to keep your vehicle in Chapter 7, you need to stay current on the loan and reaffirm the debt. In Chapter 13, your ongoing car payment continues throughout the case, while arrears can sometimes be addressed through the plan depending on the loan terms and when you purchased the vehicle. Falling behind on the car payment — in either chapter — puts the vehicle at risk.
What happens if I paid one creditor a large amount and then file bankruptcy?
If you made a significant non-routine payment to a creditor within 90 days of filing (or one year for insiders), the trustee may file an “adversary proceeding” to recover that payment. The creditor must return the money to the bankruptcy estate, where it is distributed among all creditors. This does not affect your discharge directly, but it can be disruptive and upsetting for the creditor you paid. Disclose any large recent payments to your attorney before filing.
Do I need to be current on my debts to file bankruptcy?
No. There is no requirement to be current on your debts before filing bankruptcy. In fact, most people who file are behind on many of their bills. What matters is your current financial situation, your income relative to the means test, and the types of debt you have — not whether you are up to date on payments. For more on this, see our post on whether you have to be behind on debts to file bankruptcy.
Legal Disclaimer
This article is for general informational purposes only and is not legal advice. Reading this article does not create an attorney-client relationship with Duncan Law. Bankruptcy laws can be complicated, and how the law applies depends on the facts of your situation. If you have questions about your specific circumstances, you should speak with a qualified bankruptcy attorney.
