In Los Angeles, California, where I practice bankruptcy law on behalf of consumers, and every other jurisdiction in the United States, it is true that, once you file a petition for either Chapter 7 or Chapter 13 bankruptcy, all collection attempts against you must cease. The reason for this is that, as I’ve discussed in many of my posts on this blog, upon the filing of the bankruptcy petition, an “automatic stay” goes into effect against all of your creditors’ collection attempts. This automatic stay, which originates in Section 362(a) of the US Bankruptcy Code, prevents creditors from calling, sending bills or letters, garnishing your wages or bank accounts or state income tax refunds, or foreclosing upon or repossessing your property. It is a sweeping stay that is intended to freeze all of your incoming and outgoing assets and liabilities so that the bankruptcy court can properly adjudicate the bankruptcy process.
Most creditors, upon receiving notice of the bankruptcy, do indeed stop collection attempts cold. When the bankruptcy petition is filed, notice is sent both electronically and by mail to every creditor listed in the petition. Creditors who are inadvertently not listed in the petition may be notified by you or your attorney even after the petition is filed, and, generally, even at that point, they will understand that they need to freeze all collection efforts.
Every once in a while, though, a creditor (usually one of the countless, dubious collection agencies across the country) will ignore the notice and continue harassing debtors who have filed for bankruptcy, even after having been informed of that fact and provided with the debtor’s case number and filing-date. What then?
At that point, there are a number of remedies available to you and your bankruptcy attorney. Primarily, under Section 362(k) of the US Bankruptcy Code, these violations of the automatic stay may be actionable. Likewise, such efforts may also be actionable as contempt of court. What that means is that your attorney may file a motion against that creditor in the Bankruptcy Court which may result in an award of $100 per contact attempt for you, as well as your attorney’s fees paid by the creditor.
In short, the automatic stay against collection attempts is one of the many protections and advantages the law offers those who file for bankruptcy. If you are considering filing for bankruptcy, please contact the Law Offices of Chirnese L. Liverpool at (818) 714-2200.
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