When you file for Chapter 7 bankruptcy, the U.S. Bankruptcy Code provides an “automatic stay,” a period of time in which any and all lawsuits, wage garnishments, harassing phone calls, and debt collection efforts against you are prohibited.
While the automatic stay is effective immediately, your creditors must also be notified in order to temporarily cease these actions, and how soon creditors are notified can vary depending on their size. Large banks, credit card companies, and collection agencies (sometimes known as “debt buyers”) can be notified of your filing within one to two days via a centralized database, while smaller creditors must usually be notified directly by the court, which can take longer in some cases.
If a creditor continues collection practices against you despite your automatic stay, you should first provide the case number for your bankruptcy filing to ensure that the creditor has indeed received notice of the stay. If collection practices continue beyond this point, the creditor may be in violation of the Fair Debt Collection Practices Act (FDCPA) and your bankruptcy attorney can put a stop to these actions and even earn you compensation.
If you’ve been a victim of unlawful debt collection/harassment or are struggling financially and considering filing for Chapter 7 bankruptcy, you’re not alone. Contact an experienced bankruptcy attorney today for a free consultation.