One of the most important and basic elements of the Bankruptcy Code is the automatic stay which comes into effect the moment a debtor files for bankruptcy. Automatic, immediate – an injunction against all your creditors to stop collection efforts. Creditors who are reputable, large, have been conducting business for decades, and want to conduct business for decades to come, all abide by the automatic stay. It is very, very rare for a “reputable” business to continue collection efforts.
So what if you come up against a renegade creditor who continues to call, email, write you despite your bankruptcy filing? Let’s talk first about the witless creditor who wants to stay in business for the foreseeable future.
Document, document, document. If you get one or two letters from a creditor in the weeks or first month after your bankruptcy filing, just collect those and see if they continue to offend after a month. If they do, let us know. These “offenses” are typically because of administrative lag and not malicious or calculated.
Past the first month, note the date/time/content of each contact. Bankruptcy Judges do not take lightly to creditors who stomp on your legal rights while you are under the jurisdiction of the bankruptcy court. We can file a motion for sanctions and you may be compensated for actual damages, our fees for filing the motion, and punitive damages.
Let’s talk next about the fly-by-night category of creditors. By that I mean certain payday loan companies that are online, have parent companies that are overseas, and the like. We have seen some of these “companies” continue to call our clients. These are very few and far between but we see them. Understand that if these (rare) calls continue, the system is not failing you, but that these creditors lie outside the system. Of course hindsight is 20/20 and you’d never do business with these predatory creditors again but rest assured that these “creditors” may call you here and there, but they will never be able to legally collect from you or sue you after your bankruptcy is over and you have your discharge.
Bottom line is that the automatic stay ensures swift reprieve from the pressure and stress of creditor calls and violations of the automatic stay are not tolerated by the judges and violators are roundly punished.
by Karen Maxcy, W M Law Attorney