As soon as you file bankruptcy, the automatic stay is triggered, stopping all creditor collections activity. This means that creditors are prohibited from calling you, writing you, filing lawsuits against you, levying your bank account or garnishing your wages. Unfortunately, some creditors violate the automatic stay and continue their collections activity anyway. Fortunately, there is a way to protect yourself.
Don’t Make Payments
No matter how aggressive a creditor is towards you DO NOT give them any of your money. Remember, you are protected by bankruptcy law, and you have no legal obligation to repay debts during your bankruptcy as long as the automatic stay is in place. There are some exceptions—the bankruptcy automatic stay will not stop certain collections activity such as those related to criminal cases and child support. Your bankruptcy attorney will let you know what creditors are stopped by the automatic stay and which are not.
Keep a detailed account of every call or letter you receive from a creditor. Record the name of the caller, their phone number, and even get an address if you can. If the creditor seized cash in your bank account or garnished your wages, record how much was taken and when. A word of caution, if a creditor attempts to repossess your vehicle after you’ve filed bankruptcy, you can verbally tell them about your bankruptcy filing but do not attempt to physically stop them. Many people have been harmed in confrontations with repo-men.
Tell Your Attorney
Immediately notify your attorney of any violations of the bankruptcy automatic stay. Your bankruptcy attorney can act on your behalf to notify the bankruptcy court which will then take action to stop violators. The bankruptcy court will look at three things when determining how to punish the violator:
Did the violation take place while the automatic stay was in place? If a creditor attempted to collect right before the it went into place then it is not considered a violation.
Did the creditor know that you filed bankruptcy when they violated the automatic stay? Sometimes letters get crossed in the mail and a creditor may send you a collections letter right before hearing of your bankruptcy filing. If that is the case then their violation is not intentional.
Did the creditor willfully act in bad faith? If the creditor knew you filed bankruptcy and intentionally tried to deceive you into paying a debt covered by the automatic stay, they are acting in bad faith and could be sanctioned by the bankruptcy court.
Your attorney can work with you to retrieve funds taken in violation of the automatic stay and if the creditor’s abuse is severe enough and they are repeatedly violating the automatic stay, you may be advised to file a lawsuit against the creditor.
If you want to find out more about the bankruptcy automatic stay, contact us today.