Can I stop the harassing phone calls and letters from creditors and collection agencies by filing a Chapter 7 Bankruptcy?

Edrie Pfeiffer
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Edrie Pfeiffer, Bankruptcy & Divorce Attorney

One of the strongest features of a bankruptcy is what is referred to as the "automatic stay". The bankruptcy code contains a provision that says when you file a bankruptcy, all collection actions must stop or "be stayed" immediately. This means that once a case number is assigned to your bankruptcy petition, virtually no one can take collection actions against you. This includes the IRS, your mortgage company, the repo man or that nasty collection agent who has been calling you several times a day.

The Bankruptcy laws and the courts have defined collection actions very broadly. Not only can a creditor not sue you over a debt, if they have filed a law suit, they must dismiss it. If they have a garnishment in place, they must release it. The mortgage company cannot proceed with a foreclosure on your house without permission from the bankruptcy court. The repo man cannot pick up your car without permission from the bankruptcy court. In addition, neither the creditor or the collection agency can call you or send you letters about any debt.

Of course, for a creditor to stop all actions, they have to know that you have filed a bankruptcy. While there are penalties for violating the automatic stay, the creditor must have knowledge of the bankruptcy to be found to have violated the stay. The most common way that creditors are notified is that the bankruptcy court mails a notice to them after your case is filed. However, you can also notify the creditor by giving them your case number. One of the ways that we assist our clients is by contacting any creditor, who has filed a law suit, scheduled a foreclosure or repossessed a car, of the bankruptcy filing.

There are some limited exceptions to the automatic stay. Criminal proceedings are not stopped. Neither are child support or spousal support collection actions. A divorce action is also not stopped by the bankruptcy.

If you are being harassed by creditors or collection agencies, contact me or call me today at 757-320-2010 to schedule a free consultation on how we can get these nasty creditors off your back with a bankruptcy. The only thing worse than being harassed over a debt is not taking the steps necessary to stop the harassment. Let us help you take charge of your financial life today.