Using Bankruptcy to Prevent Creditor Harassment

People facing financial troubles often face harassment in the form of non-stop calling or other tactics from their creditors. Creditors or collection agencies may use explicit language or make threats about putting you in jail, or they may even try to track you down outside of your home, at work, for instance.

A Texas woman sued a debt collection company in federal court after she had had enough of its harassment. She alleged that the company would call her twice a day, every day. She said that the caller would identify himself as an attorney and threatened that he would have a judgment against her.

In her lawsuit, the woman accuses the company and its callers of violating the Fair Debt Collection Practices Act and the state law governing debt collection. The woman is seeking $1,000 for each violation of the act. If you would like more information about ending creditor harassment, a Morris County bankruptcy lawyer can advise you.

Bankruptcy and Stopping Credit Harassment

The good news is that, as soon as you file for Chapter 7 bankruptcy or Chapter 13 bankruptcy, the law prohibits creditors from contacting you in any way. Some refer to this as the “automatic stay” provision of bankruptcy law.

Some of the important benefits of the automatic stay include the following:

  • Creditors may not initiate a lawsuit against you or continue one that they have already filed.
  • In most cases, the bankruptcy filing will void any actions that a creditor takes after you filed.
  • The automatic stay applies whether the creditor even knows about the bankruptcy filing, though, it is always best to have your attorney inform them as soon as you file.
  • Creditors may not seek wage garnishments to recoup the money that you owe them after you file.
  • A creditor cannot even contact you after you file for bankruptcy without permission from the bankruptcy court.

2005 changes to the automatic stay provision do alter how the stay works for repeat bankruptcy filers. Some of the important changes include the following:

  • If you had a pending case in the preceding year that the court dismissed and you then file again, the automatic stay ends in 30 days unless you can show that your new filing was in good faith.
  • For debtors with two or more bankruptcy filings within the past year, there is no automatic stay period at all.
  • Several exemptions allow creditors of people with past filings to be exempt from the automatic stay under certain conditions.

Creditors that violate the automatic stay face liability for any damages they cause. The bankruptcy court can also levy punitive damages against creditors who continue their harassment. To learn more about the automatic stay and other protections that bankruptcy offers against creditors, contact a Morris County bankruptcy attorney at Ast & Schmidt, PC.

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