On top of mounting medical bills, a job loss, or an illness that has caused your financial hardship, creditors and bill collectors can nevertheless be relentless. This can be overwhelming, and psychologically stressful.
They call your phone as much as five times a day, and even at 8:00 am on a Sunday morning! What may be even more frightening, you may be facing foreclosure, garnishment, or a bank levy.
If you have suffered a financial hardship and are being bombarded by bill collectors or threatened legal action, bankruptcy is an easy solution to get you on your way to financial health and recovery.
The filing of a bankruptcy case, under any chapter of the Bankruptcy Code, triggers an injunction against the continuance of any action by any creditor against the debtor or the debtor’s property. 11 U.S.C. 362. This is called the “automatic stay.” Once you file your bankruptcy, you are immediately protected. The automatic stay stops any lawsuit, state or federal, that is filed against you by a creditor, collection agency, government entity or anyone trying to collect from you. The automatic stay is so powerful!
In addition to the fresh start provided to you by a bankruptcy, you are protected by the “automatic stay” during your bankruptcy, and until your debts are discharged. In most cases, the bankruptcy, vis-à-vis the automatic stay, can stop foreclosure, garnishment, bank levy, eviction, utility suspension, and automobile repossession. Even more rewarding is that when the debtor gets a discharge, the automatic stay is replaced by a permanent injunction prohibiting creditors from all of those actions with respect to discharged pre-petition debts.
Once a creditor or bill collector is noticed of your bankruptcy filing, they are required by federal law to immediately stop all collection efforts. Once you file your bankruptcy petition, the Court mails notice of your bankruptcy to all of your creditors. If they continue to contact you, due to a lag-time in notice, they will stop contacting you if you provide them with your bankruptcy case number. If a creditor continues to use collection efforts once informed of the bankruptcy, that creditor can be subject to court sanctions and attorney fees!
Any creditor who violates the automatic stay can be charged actual damages caused by the violation and sometimes for punitive damages. Creditor actions taken after the stay is in place have no legal effect.
If, again, you have suffered a financial hardship and are being bombarded by bill collectors or threatened legal action, bankruptcy is an easy solution to get you on your way to financial health and recovery.