For most people, the decision to file bankruptcy is a difficult one. While bankruptcy makes financial sense for many individuals, the social stigma can feel overwhelming. At the same time, many individuals feel the need to file bankruptcy to stop repeated calls from debt collectors.
Filing bankruptcy should stop debt collection. Unfortunately, it’s not always that simple. Here is what you need to know.
Upon filing, the automatic stay goes into effect
Once a bankruptcy petition is filed, all debt collection efforts must cease. It is that simple. Creditors and debt collectors listed on your bankruptcy petition should receive notice directly from the bankruptcy court—and should stop any and all collection efforts.
It does not matter if your bankruptcy has been discharged. Once you file your petition, the automatic stay goes into effect. During the period between when you file and when your petition is discharged you are protected.
If you have been contacted by a debt collector after filing bankruptcy, there is a chance the creditor or debt collector has violated the bankruptcy code and the Fair Debt Collection Practices Act (FDCPA). If this happens to you, immediately contact your bankruptcy attorney or a consumer rights attorney.
Asking for information about your bankruptcy attorney
Once a debt collector knows you are represented by an attorney and they have contact information for your attorney, they cannot contact you. The debt collector is not allowed to ask details about your bankruptcy attorney—like whether you have paid them, when you are filing, etc. All they need to know is the attorney’s name and contact information.
If a debt collector continues to ask questions about your bankruptcy attorney, or if they continue collecting on a debt after learning you have an attorney, they may have violated the FDCPA.
Once your debts are discharged, they cannot be collected
Certain debt collectors are notorious for trying to get one last bite at the apple—trying to collect a discharged debt one last time. That is a big no-no. Once the debt is discharged in bankruptcy, it is not be collected and you do not owe it. In rare situations, a creditor may not have received notice of the bankruptcy, and may have a justified reason for attempting to collect—but that excuse only works once. Once they have notice, they cannot collect.
In many cases, however, the creditor or collector received notice of the bankruptcy is simply making one last attempt to collect. Many consumers are caught off guard and not only feel harassed, but they agree to make a payment. If a debt collector is trying to collect on a debt that you have discharged in bankruptcy, they may have violated the bankruptcy code and the Fair Debt Collection Practices Act.
If you have discharged a debt in bankruptcy and you are still being contacted by debt collectors or if you have questions about your rights against debt collectors, please contact me.