February 23rd, 2009 by Reed Allmand 
Modern banking almost requires automatic banking for nearly every expense, cell phone plans, cable television bills, utilities and even rent (sometimes); but using automatic deductions from your bank account or credit card during a bankruptcy can reek havoc on your bankruptcy case.
For example, if a debtor has automatic deductions from his/her bank account for a utility bill with a credit card as a backup, the debtor could unknowingly end up with a new charge on a credit card that is in bankruptcy. The consequences could be devastating for the debtor in bankruptcy. If a debtor makes a charge (even an automatic one) a bankruptcy trustee may suspect fraud on the part of the debtor and dismiss the case. Even in a case where a charge is not made to a credit card in bankruptcy, automatic deductions from a bank account may cause one creditor to be paid (out of order) before another. During bankruptcy there are certain creditors who have priority when it comes to being paid, with automatic payments that order could be disrupted. That’s why if you’re considering bankruptcy, you must cancel all automatic payments to your bank account, credit cards and all post-dated checks before you file you file for bankruptcy.
About Reed Allmand
Allmand's vision is rooted in his own financially precarious childhood in Abilene "My father always had difficulty holding a job and supporting our family, so after my parents divorced when I was 12, my sister and I got jobs to help make ends meet," he recalls. "I remember what it felt like as a child to worry that our car would be repossessed or home foreclosed on."
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