Filing for bankruptcy is a process that many undergo to relieve the pressure of debt. Yet for some filers, the calls and letters from creditors do not stop the moment paperwork reaches the court, and that can raise questions about your options to prevent it.
The shield that stops creditor calls
When you file for a Chapter 7, a federal protection known as the automatic stay takes effect immediately. This is an injunction that prohibits most creditors from continuing collection efforts against you, including lawsuits, phone calls, letters and wage garnishments.
The stay applies broadly to nearly all types of consumer debt. Credit card companies, medical providers, debt collectors and other creditors must halt their efforts once they receive notice that you have filed your case.
This protection remains in place for the duration of your petition , which typically lasts three to four months. After discharge, a permanent injunction prevents creditors from collecting debts that the court eliminated.
The exceptions that fall outside the stay
Not every type of creditor contact violates the automatic stay. Certain debts and legal proceedings fall outside the scope of its protection, which means some may still reach out to you lawfully during your case.
Domestic support obligations are one of the most common exceptions. If you owe child support or alimony, the recipient or a state enforcement agency can continue pursuing those payments regardless of your bankruptcy filing.
Secured creditors can move the court to lift the stay if their interest in the collateral is not adequately protected or if other statutory requirements are met. A lender with a lien on your vehicle, for example, can file a motion to lift the stay if you have stopped making payments and the collateral is depreciating.
The remedies that hold creditors accountable
If a creditor continues contacting you about a dischargeable debt after receiving notice of your filing, a written notice from an attorney can be enough to resolve the issue. The violation can simply be a failure to update internal records rather than a deliberate disregard of the court order.
Should a creditor still attempt to contact you, you may be able to file a motion for damages for a willful violation of the automatic stay. This can result in the court awarding actual damages, costs and attorney fees.