The Short Answer
When you file bankruptcy, the automatic stay immediately goes into effect — and many creditors will stop drafting payments from your bank account to avoid accidentally violating it. This happens even if a particular debt isn't included in your bankruptcy. You'll want to plan ahead so you don't fall behind on critical bills like your mortgage or car payment. Contact those creditors directly to request paper statements while you get your payment arrangements sorted out.
If before filing for bankruptcy you had automatic drafts from your bank accounts to pay other bills then this may stop when you file the bankruptcy. It’s obviously important to know that these automatic drafts may stop because we want to make sure you do not get behind on things like house payments, car payments and other important bills you have.
Creditors may stop the automatic draft(s) because they want to make sure they don’t violate the automatic stay enacted by filing the bankruptcy. They don’t want to accidentally charge you money that has been wiped out in the bankruptcy. However, even if you don’t include a debt in your bankruptcy they may still stop the automatic draft(s) for precautionary measures.
If you file bankruptcy then you can contact the creditor and get them to begin to send you paper statements if necessary. We talk more about how to get statements again after filing bankruptcy in another blog post.
However, you may not be able to get automatic drafts set up right away after filing the bankruptcy. Be aware of this and be sure to plan accordingly.
Key Takeaways
- Creditors stop automatic drafts after you file because they don't want to risk violating the automatic stay triggered by your bankruptcy filing.
- This can happen even for debts you did not include in your bankruptcy — creditors often pause drafts as a precautionary measure.
- Falling behind on your mortgage or car payment because of a stopped draft can have serious consequences, so you need to act quickly.
- You can contact creditors after filing to request paper statements so you know when payments are due.
- Automatic drafts may not be available to set back up right away after filing, so plan to make manual payments during this period.
Attorney Insight
The mistake I see most often is clients assuming their automatic payments will just keep running normally after they file — and then their mortgage or car payment slips because the creditor quietly stopped the draft without any notice. Filing bankruptcy triggers the automatic stay, and creditors here in North Carolina are often more cautious than people expect, halting drafts even on debts that were never part of the case. I always warn clients upfront: write down every bill you pay on autopilot and have a manual plan for each one before we file. Missing a car payment in the first month of a Chapter 13 plan, for example, can create headaches with the trustee that are entirely avoidable.
