Are you being harassed by creditors to repay outstanding debt, or make missed payments?
This can be invasive – and embarrassing. Creditors can make harassing phone calls, send threatening letters, show up at your house, or even contact you at work. They can also take steps to repossess property or garnish your wages.
Fortunately, there is a way to end this. Filing for bankruptcy can put an end to harassment from creditors with an automatic stay.
What Is An Automatic Stay?
As soon as you file for bankruptcy, an automatic stay is put in place against creditors who have been – or plan to start – taking action against a debtor or their property. This means that creditors are not allowed to seek payment or take back your property while the automatic stay is in place. This gives you temporary relief from having to deal with creditors. It can be viewed as one of the top benefits of filing for bankruptcy and is one of the most powerful orders you can invoke in civil court proceedings.
It’s important to understand, though, that the automatic stay does not erase your debt. This suspends collection efforts when a bankruptcy case begins. What happens to your debt is then determined during your bankruptcy proceedings.
The automatic stay applies to home foreclosures, utility disconnections, evictions, vehicle repossessions, and collections on debts you incurred before filing for bankruptcy. Some actions that cannot be stayed are:
- Debt incurred after filing for bankruptcy
- Child support payments
- Alimony or spousal support payments
- Criminal proceedings
Chapter 7 vs. Chapter 13 Bankruptcy
If you’re considering filing bankruptcy to stop harassment from creditors, it’s important to know the differences between the two most common types of bankruptcy for individuals – Chapter 7 and Chapter 13 bankruptcy.
Chapter 7 bankruptcy focuses on discharging your unsecured debts (credit cards, personal loans, medical bills, and others) and resolving your secured debts (like car loans and mortgages) through agreeing to continue payments or surrendering the property. The court will review your assets and may liquidate the non-exempt items to pay back some of your debt. Chapter 7 has a faster timeline, with most cases usually being finalized in a few months. However, to qualify for Chapter 7 you need to prove your income is low enough that you cannot afford to repay your debt.
In Chapter 13 bankruptcy, you work with the court to establish a repayment plan for your secured debts, such as your house or your car. You may be able to discharge most of your unsecured debts. Under this plan, you typically can retain your assets, as long as you keep up with your repayment plan. A repayment plan can last 3 to 5 years, so this form of bankruptcy can take longer to resolve than Chapter 7.
What Happens If Creditors Don’t Stop Harassing You?
So, you filed for bankruptcy, an automatic stay was put in place, and your creditors are still harassing you. Now what? You can take legal action against the creditor. The injunction is a court order, so any creditor who violates the stay can face orders for contempt, damages, or sanctions. Some examples of automatic stay violations can include:
- If your car is repossessed.
- If your home is foreclosed.
- If they continue to make harassing phone calls.
- If they continue to send collection letters.
- If you are garnished on a debt you had prior to the bankruptcy filing
Let Us Help You
If you’re being harassed by creditors, let our lawyers at The Law Offices of Alexzander C.J. Adams, P.C. help. We work for you, the people, and not institutions. Contact us for a free case evaluation, or no-obligation consultation. We are dedicated to helping you overcome this small bump in the road and assisting you to get on with your life.