If you’re worried about your creditors hounding you day and night about your debt while your bankruptcy case is open, the good news is that such harassment is generally prohibited. Bankruptcy provided debtors with a variety of rights that many people are unaware they have. Fortunately, working with a bankruptcy lawyer can help ensure you understand your rights and how to address illegal creditor harassment.
The Automatic Stay: Your Shield Against Creditors
When you file for bankruptcy, an automatic stay goes into effect immediately. This powerful legal tool prohibits creditors from taking any collection actions against you. The automatic stay covers a wide range of activities, including phone calls, letters, lawsuits, wage garnishments, and even foreclosure proceedings. Creditors must stop all efforts to collect debts as soon as they receive notice of your bankruptcy filing.
This protection gives debtors breathing room to reorganize their finances without the constant pressure of creditor demands. It allows you to focus on your bankruptcy case and develop a plan to address your debts, whether through liquidation under Chapter 7 or reorganization under Chapter 13.
Exceptions to the Automatic Stay
While the automatic stay provides broad protection, it has certain exceptions. Not all types of debt or creditor actions are subject to the stay. For example, the stay does not apply to certain family law proceedings, such as those involving child support or alimony. If you owe back child support, your ex-spouse or the state can still pursue collection efforts during your bankruptcy.
Additionally, the stay does not prevent the IRS from auditing you or demanding tax returns. However, it does halt other IRS collection activities, such as levies and liens, temporarily. If you have a secured debt, like a mortgage or car loan, the creditor may seek relief from the stay to proceed with foreclosure or repossession if you are not current on your payments.
Communication from Creditors During Bankruptcy
Despite the automatic stay, creditors may still contact you under specific circumstances. Creditors can reach out to verify details about your bankruptcy case, such as the case number or the name of your attorney. These communications should be limited to administrative purposes and not involve any attempts to collect the debt.
If a creditor continues to contact you about debt collection after being informed of your bankruptcy, this action constitutes a violation of the automatic stay. You have the right to notify the bankruptcy court of such violations, which can result in penalties against the creditor, including fines and damages.
Handling Creditor Violations of the Automatic Stay
If a creditor violates the automatic stay, you should take immediate action. Document every instance of contact, including the date, time, and nature of the communication. Notify your bankruptcy attorney, who can address the violation with the creditor or file a motion with the bankruptcy court.
The court can impose sanctions on creditors who willfully violate the automatic stay. These penalties may include compensatory damages for any financial loss you suffer, punitive damages to deter future violations, and reimbursement of attorney’s fees. Taking action against stay violations helps maintain the integrity of the bankruptcy process and ensures that you receive the full protection of the law.
Contact Us for Legal Assistance
If you want a legal advocate who can protect your rights throughout the bankruptcy process, reach out to Arnold Law Group, APC for assistance. Our experienced bankruptcy lawyers can help you navigate each step of the bankruptcy process and address many different challenges that can include violations of the automatic stay.
If you need debt relief, bankruptcy can provide it. Contact us today to learn more about your legal options.