Once you file for bankruptcy, everyone you owe money to has no choice but to fall in line and follow the rules. Federal bankruptcy codes have very explicit rules for creditors during and after bankruptcy, but many filers may not be aware of them. You may be dealing with creditors before and during your bankruptcy, so read on to find out how more.
Before Filing Chapter 7
It's no surprise that the aggressive tactics of creditors prompt many consumers to file for bankruptcy just to make it all stop. Creditors have rules to follow when it comes to making contact with consumers, but they are often not enforced. You can be called nearly any time and any day of the week. In addition, you can be texted and emailed too. As letters from creditors pile up, anxiety about unpaid bills will surely mount.
Taking Legal Actions Against You
Unfortunately, annoying phone calls from creditors are only the beginning. Eventually, many creditors will take you to court for unpaid debts. In many cases, consumers don't appear to defend themselves since there is no reason to do so unless you disagree with the debt. When the court finds in the creditor's favor, a judgment is imposed on the consumer. That judgment can then lead to liens placed on property like your home and wages cut short by garnishments. Finally, consumers can suffer from foreclosure actions on their home and repossessions of their vehicles.
After You File Chapter 7
All filers are immediately protected after they file. As soon as the paperwork hits the clerk's office, creditors must obey. Unfortunately, creditors don't always know that you have filed for bankruptcy protection. If you get contacted by a creditor after you have filed, politely let them know your case number and the contact information of your bankruptcy lawyer. You are not going to hear from them again — at least in most cases. Thanks to the automatic stay, creditors must cease all debt collection activities immediately. That means they cannot send you any mail of any type, phone you for any reason, or make contact with you — no matter what. As far as court actions go, all foreclosure, repossession, eviction, wage garnishment, and liens must go away. There is an exception for unpaid child support, student loan debt, and certain federal tax debts.
To learn more about how bankruptcy treats creditors and their actions, speak to a bankruptcy law attorney.