When Will Creditors Stop Calling If I File Chapter 7 or Chapter 13 Bankruptcy?

When Will Creditors Stop Calling After Filing Chapter 7 or Chapter 13 Bankruptcy in Michigan—and What If They Don't?


Creditors Stop Calling Upon Filing of the Bankruptcy Petition

Will Creditors stop calling after you file for Chapter 7 or Chapter 13 bankruptcy? In most cases, yes. Upon the filing of a petition for bankruptcy, a sort of "master injunction" under Federal law called the "automatic stay against collections" is put into immediate 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, foreclosing upon or repossessing your property, or committing other acts that constitute the collection of a debt. 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 inadvertantly 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.

Creditors Stop Calling After Filing—Unless They Don't

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 attorney. Primarily, under Section 362(k) of the US Bankruptcy Code, these violations of the automatic stay may be actionable. What that means is that your Michigan bankruptcy attorney may file a motion against that creditor in the Bankruptcy Court which may result in a punitive sanctions awarded to you by the court, additional damages if any to be paid by the creditor, and your attorney fees paid by the creditor. Thus, the Automatic Stay injunction is one of those most powerful tools consumers experiencing creditor or collection agency harassment have at their fingertips. Although it may take 4 or so months to receive your discharge in a Chapter 7 bankruptcy and 3-5 years to receive the discharge in a Chapter 13 bankruptcy, the benefits of filing are immediate. Attorney John Hilla and The Hilla Law Firm, PLLC have obtained sizeable awards for clients whose creditors have ignored the Automatic Stay.

Creditors Stop Calling After Filing—Unless They Don't Have To

While the Automatic Stay generally prevents even the collection of non-dischargeable debts such as student loans while the bankruptcy is pending, there are some types of creditor actions that are not stopped by the Automatic Stay. For example, in a Michigan eviction proceeding where the landlord has already obtained a judgment for eviction, the Automatic Stay will prevent any attempt by a landlord to collect on back-rent owed by a delinquent tenant who files for Chapter 7 or Chapter 13 bankruptcy, but the Automatic Stay will not prevent the landlord from pursuing the eviction of the tenant from the rental property in question unless the tenant takes certain steps through the Bankruptcy Court. Child support payment collection is also given limited protection only by the Bankruptcy Code, and there are other examples as well.

Creditors Stop Calling: The Bottom-Line

Creditors must stop calling after your petition is filed. They must also stop filing under certain circumstances before you file once they are notified that you are represented by Counsel under the Fair Debt Collections Practices Act. The bottom-line is that, in order to maximize your protection from creditors both before and after your bankruptcy filing, you should consult with an retain an experienced Michigan bankruptcy attorney such as John Hilla of The Hilla Law Firm, PLLC.  A bankruptcy filing is not just a matter of filling out some forms and filing them. Without experienced Counsel, you may not be utilizing the full armament the Bankruptcy Code and other areas of Federal Law entitle you to. Without an experienced attorney, you run the risk of leaving yourself unprotected and even of leaving money in the form of sanctions and other Automatic Stay-related damages on the table. If you are a Michigan resident and are considering filing for bankruptcy, please contact us at (866) 674-2317 or click the button below to schedule a free, initial consultation.

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