If an individual has decided to file for chapter 7 bankruptcy protection and meets the criteria, in most situations it is advisable to not continue to pay their credit card debt. First and foremost, if a person meets the criteria of a chapter 7, he cannot afford to pay the debt anyway. Furthermore, a chapter 7 discharge eliminates all credit card debt, regardless of the amount due. Therefore, the payment made to the creditor will not benefit the debtor.
Typically, the aforementioned explanation also applies to chapter 13 debtors, as well. However, in the unusual case, where the debtor is required to pay all credit card debt through the chapter 13 bankruptcy plan, it may be advisable to keep current with the credit card debt, prior to the filing.
If a person is current with credit card debt payments, stops making payments, and decides to not file for bankruptcy protection, this will likely result in increased interest and penalties.
Typically, each creditor will review the debt incurred by each debtor for fraudulent conduct. If the creditor believes that a debtor incurred debt with no ability or intent to pay the debt, such creditor may file a complaint with the court, requesting to exclude the debt from the bankruptcy discharge or elimination. A creditor may deem a debt to be fraud, if a substantial debt was incurred prior to the filing, with no payments made to the creditor.
Robert Manchel, a New Jersey bankruptcy attorney, can be reached at (866) 503-5655, to answer your questions.