You can freeze your credit card bills by officially filing for bankruptcy. Being bankrupt simply isn't enough. Your financial situation must be officially recognized by the federal bankruptcy courts for your credit card bills to be "frozen." Finance charges and fees may continue to mount while the credit card accounts are frozen, but the card companies will be prohibited from collecting from you. You'll also be prohibited from using the cards by both the card companies and the bankruptcy court.
Automatic Stay
Once you officially file for bankruptcy, a judge will issue a legal order called an "automatic stay." The automatic stay will notify all your creditors about the bankruptcy and direct them -- by court order -- to end collection efforts against you while the bankruptcy court reviews your finances.
Creditor's Response
Creditors can get around the automatic stay by appearing in court to ask the judge to remove the stay by issuing an order to "lift the injunction." Generally this step is taken by landlords who argue that the tenant filed for bankruptcy frivolously simply to avoid being evicted. The automatic stay, in addition to providing protection from credit card companies and other creditors, stops evictions. Credit card companies generally do not contest the automatic stay, feeling that someone filing for bankruptcy really does not have the money to pay credit card debt.
Pre-Bankruptcy Process
Federal bankruptcy laws require people filing for bankruptcy to seek official credit counseling first. The 90-minute counseling sessions discuss the pros and cons of bankruptcy, including alternatives to resolving credit card and other debt. For example, the credit counselor may recommend you "freeze" your credit card bills by calling the lender and explaining your financial situation. The card companies may agree to suspend payments temporarily while you recover from a setback.
Legal Advice
Most bankruptcy attorneys offer free consultations if you are serious about freezing your credit card bills. The attorney can tell you about the entire process and the cost. Or contact the local Legal Aid office to determine if you qualify for free legal help.
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