How Does Bankruptcy Stop Creditor Calls and Other Collections Actions?

If you have fallen on hard times and are having a difficult time paying your bills, you may be receiving frequent contact attempts from debt collection agencies, which can quickly become frustrating. Fortunately, there is some relief to be found.

Past Due Notice

If you are struggling with debts and feel unable to repay what you owe, filing for bankruptcy may help give you the fresh start you are looking for. Bankruptcy isn’t your only choice, and you may have alternatives, but bankruptcy is also the only way to gain legal protections that stop all collection actions in their tracks. It does this with a court order called an “automatic stay”, which is meant to give you time to handle your debts and carry out your bankruptcy filing. The automatic stay lasts the entirety of the bankruptcy case, and it only ends once the case is completed or if the case is thrown out.

If you think that filing for bankruptcy might be the right solution for you, contact an experienced Florida bankruptcy attorney at Hoskins, Turco, Lloyd & Lloyd. During your free consultation, our experienced attorneys will be able to hear the specific facts about your situation and help guide you to make the best financial decisions for you and your family.

Bankruptcy Provides Additional Protections Against Creditor Harassment

Legally, debt collection agencies can only contact you during specific hours of the day, and can not try to contact you at work if you request that they don’t. If you formally request, in writing, that they stop contacting you, they are legally required to do so. Once they have received your request, they may only contact you to inform you that there will be no further contact and to inform you of specific actions, like filing a lawsuit.

However, even if you’ve been able to stop the harassing phone calls and emails, you are still responsible for paying the debt that you owe. If you are unable to find a solution with the debt collection agency, they are usually still able to sue you in order to recover the debt.

The only way to completely address debts, and halt all collection actions,  is to either repay them in full or to file for bankruptcy. Once bankruptcy is filed, the court will grant you an automatic stay, halting all collection activities until your case is completed. Since both Chapter 7 and Chapter 13 bankruptcy typically discharge all remaining debt not repaid during the case, filing for bankruptcy can be a complete solution to ending creditor calls for your current debts — forever.

What Is an Automatic Stay?

As soon as you’ve filed for bankruptcy, an automatic stay is put into place. Automatic stays are available for both Chapter 7 and Chapter 13 bankruptcy.

An automatic stay legally requires that all collection actions against a borrower must stop once your case has been filed. It specifically states that creditors may no longer contact you to collect debts, which means an end to harassing phone calls, emails, and letters. Automatic stays can even stop garnishments and foreclosure proceedings already scheduled to occur.

Automatic stays are usually active for the duration of your bankruptcy case. You should notice a substantial decrease in collection attempts once you’ve filed for bankruptcy, as collection agencies can be sanctioned if they continue to try to contact you once they’ve been notified of your case.  If a company decides to disregard the law and you are still being harassed once you’ve filed for bankruptcy, you should contact an attorney immediately.

However, there is a legal process that creditors can go through if they want to continue contacting you. If creditors want to continue trying to collect the debt they’re owed, they have to get approval from the court. If this happens, you will be notified and asked to attend a court hearing. If the judge approves the creditor to move forward with their collection attempts, the automatic stay is lifted — in part or in full — and the efforts to recover the debt can resume.

Bankruptcy and Car Repossession

If borrowers are hoping to stop car repossession in Florida, filing for bankruptcy is a common solution. Since you are granted an automatic stay once you file for bankruptcy, collection companies are required to stop all collection attempts, including repossessing a vehicle. If you are falling behind on your car payments and are worried that repossession may be in your future, it is imperative that you contact a bankruptcy attorney sooner rather than later. While bankruptcy can stop your vehicle from being repossessed, it won’t return your vehicle to you once it’s already been repossessed or once the repossession process has been started.

Bankruptcy and Foreclosure

If your house is about to be in foreclosure, once you file bankruptcy all the foreclosure proceedings should automatically stop. The automatic stay granted to you once you’ve filed for bankruptcy can stop the sale of your house, as long as it’s filed before foreclosure action.

Additionally, once you file your bankruptcy petition to stop the foreclosure, you must also file a “Suggestion of Bankruptcy” in the foreclosure lawsuit. In doing this, you are ensuring that a state court judge is aware of your bankruptcy status and can stop the foreclosure actions in time. Your bankruptcy attorney should file this on your behalf.

Bankruptcy and Wage Garnishment

Filing bankruptcy is a quick and effective way of stopping wage garnishment. Wage garnishment must be discontinued as soon as the bankruptcy paperwork is filed.

Are There Automatic Stay Exceptions?

Automatic stays do not apply to every single type of debt and collection activity. There are many exceptions, as listed here in (11 U.S. Code § 362), but some common exceptions are listed below:

  • Criminal Court Cases — An automatic stay generally won’t have any effect on any ongoing criminal cases, as bankruptcy is intended to relieve financial distress, and not to dismiss criminal cases. However, there are some cases when these two things may overlap, such as when someone in financial distress writes a bad check. If that is the case, the bankruptcy stay may be enforced in this particular criminal case.
  • Family Support Obligations — Child support, family support, and child custody cases are exempted from the automatic stay granted to you when filing for bankruptcy.
  • Tax Bills — You will still be required to file your taxes and pay any tax bill you have accrued through the year. The automatic stay won’t apply in this case, although any tax liens against your property will not take effect unless the debt is ineligible for discharge.

Contact an Experienced Bankruptcy Attorney on the Treasure Coast

If you are considering filing for bankruptcy, contact an experienced bankruptcy lawyer at Hoskins, Turco, Lloyd and Lloyd.

With over 35 years of experience serving the Treasure Coast area, one of our experienced attorneys can guide you through the bankruptcy process and help you get the fresh financial start you’ve been needing.

Hoskins, Turco, Lloyd & Lloyd have offices located in Vero Beach, Port St. Lucie, Okeechobee, and Fort Pierce. Contact us today by calling 866-460-1990 or visiting us online to schedule your complimentary consultation.

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