Filing for Bankruptcy can Immediately Relieve Creditor Collections

Among the many benefits that come with filing for bankruptcy is stopping creditor collections. Once you file your Chapter 7 or Chapter 13 bankruptcy petition a special court injunction—known as the automatic stay — halts creditors from coercing you to pay on your debt. With few exceptions, most any creditor that you name on your bankruptcy petition must abide by the automatic stay. This means that you won’t face formal legal processes such as property foreclosure, wage garnishment repossession, civil lawsuits as well as informal demands for payments, such a phone calls or letters while the automatic stay is in place. Criminal proceedings and child support collection methods are exempt from the injunction.

Duration of the automatic stay

As the name implies, you do not need to request the bankruptcy court for the automatic stay to go into effect. Unless you filed a previous Chapter 7, 11, or 13 bankruptcy within the last year, the stay remains in force until one of the following happens:

• property or asset moves outside the bankruptcy estate
• bankruptcy court orders a dismissal of the case
• bankruptcy court closes the case
• bankruptcy court either grants or denies a discharge

Remedies for violating the automatic stay

Upon filing your petition, the bankruptcy court mails a notice of bankruptcy filing to all the creditors you itemized on your petition. The purpose, among other things, is to inform the creditors of their rights and responsibilities during the bankruptcy. If one of your creditors moves forward with collecting on debt in violation of the automatic stay, then you will be entitled to damages, actual and punitive and you may recover your attorneys’ fees.

Creditors may have a defense against a debtor’s claim that they violated the automatic stay if the creditors can demonstrate that they had no knowledge of bankruptcy filing. Therefore, you must be sure to include all of your creditors on your bankruptcy petition.

Contact us to learn more about the benefits of filing for bankruptcy. During your free consultation, our experienced Pennsylvania bankruptcy attorneys at Harold Shepley & Associates will evaluate your circumstance to determine the best debt relief route for you.  You have nothing to lose but your debt.

By Harold Shepley | Published September 27, 2013 | Posted in Bankruptcy | Tagged bankruptcy attorney, creditor collections, debt relief, file for bankruptcy | Leave a comment