Will Filing for Bankruptcy Stop the Bill Collectors?

One of the main reasons people file for bankruptcy is because they are receiving constant calls and messages from bill collectors. If you find yourself drowning in overwhelming debt and unable to keep up with bill payments, filing for bankruptcy may be a viable solution to get a fresh start.

This article examines the effect of filing for bankruptcy on debt collection efforts. In short: Filing for bankruptcy can stop debt collectors in their tracks, but there are steps you have to take. To get started, talk to a bankruptcy attorney near you today.

Automatic Stay: A Shield Against Bill Collectors

One of the most significant advantages of filing for bankruptcy is what is called the “automatic stay”. This is a court order that means that bill collectors and creditors must stop contacting you while you are going through the bankruptcy process. This applies for both Chapter 7 and Chapter 13 bankruptcy filings.

By filing bankruptcy, the automatic stay goes into effect, giving you immediate relief from creditors’ actions, including:

• Harassing phone calls and collection letters
• Foreclosure and repossession actions
• Wage garnishment or bank account garnishment

The automatic stay remains in effect until you complete the bankruptcy process. And after you receive your bankruptcy discharge and complete the process, creditors will have no reason to contact you about them.

Exceptions to the Automatic Stay

While the automatic stay is a powerful tool shielding you from creditors for unpaid credit card debt and medical bills, there are certain exceptions where creditors can still reach out to you:

• Collection agencies can still collect debts that you cannot discharge in bankruptcy, such as child support, alimony, student loans, and income tax debt.
• If you have secured debts (e.g., mortgages or car loans) and you decide to keep the property, creditors can seek permission from the court to continue collection efforts.

Providing Information to Creditors

It’s also important to note that while the automatic stay offers protection, creditors are not mind-readers. It may take a few days for them to be notified of your bankruptcy filing. During this time, they may continue their collection activities unknowingly.

You have a responsibility to inform creditors about your bankruptcy filing to ensure they are aware of the automatic stay. Sharing your bankruptcy case number and the name of your bankruptcy attorney (if you have one) will help facilitate communication.

Dealing With Violations

If creditors contact you even after being informed of your bankruptcy filing, you have the right to request that they stop these communications. Send a written cease and desist letter to inform them about your bankruptcy status and demand that they cease all contact immediately.

If creditors continue to harass you, your lawyer can take quick action against them. They may be violating federal bankruptcy laws. You can report violations to the bankruptcy court, and creditors can face penalties for their actions.

Get a Bankruptcy Attorney’s Help

Navigating the intricacies of bankruptcy law can be complex, and it’s essential to have expert guidance during this process. Hiring a bankruptcy attorney can help you in several ways:

• Ensuring proper notification: An attorney will ensure that all creditors are correctly notified of your bankruptcy filing, minimizing the risk of continued collection action.
• Handling violations: If creditors violate the automatic stay or engage in illegal collection practices, an attorney can take legal action to protect you.
• Knowledge of exceptions: An attorney can help you understand the exceptions to the automatic stay, ensuring you are prepared for any ongoing collection attempts.
• Responding to secured debts: If you have secured debts, an attorney can assist in negotiating with creditors to create a repayment plan that works for you and complies with bankruptcy regulations.
• Peace of mind: Having a bankruptcy lawyer on your side will relieve you of the stress of dealing with creditors, allowing you to focus on rebuilding your financial future.

To maximize the benefits of the automatic stay and get the debt relief you need, talk to an experienced bankruptcy lawyer today.