Creditor Harassment in Kent

When you file bankruptcy, you do not have to wait to see a judge or prove that you qualify before you get relief from your creditors. The second you file your case you are protected from your creditors. Upon filing a bankruptcy all law suits, garnishments, foreclosures, repossessions, phone calls, letters, placements of liens on your property, utility cut offs and evictions stop – almost all attempts to collect a debt stop. That is because when you file a bankruptcy the “automatic stay” in entered at the same time. It is called an automatic stay because it stops or “stays” debt collection and it takes effect automatically.

The automatic stay remains in effect until the end of your bankruptcy when you get a discharge, which is a permanent injunction prohibiting debt collection. The stay covers more debt collection than the discharge, which does not include some taxes and student loans. Some collection of fines and child support is not covered by the automatic stay.

If a creditor violates the automatic stay, you can sue them for damages and attorneys fees. To be liable for a stay violation, the creditor must get notice. It is important that you make a complete, up-to-date list of your creditors so the bankruptcy court sends notice to all your creditors. In an emergency, your attorney can make a creditor aware of the automatic stay to stop a garnishment, etc. If a creditor did not get notice and took property from you, they may not be liable for damages but they do have to give the property back.

Creditors can ask the bankruptcy judge for permission to modify the stay so they can continue collecting. Most commonly this involves mortgage companies or car companies when you are behind on payments. It is easy for mortgage companies and car companies to modify the stay in a Chapter 7 when you are behind on payments but it takes at least a month. In Chapter 13, as long as your plan provides for paying them, you are making your payments and you keep the property insured, they can’t modify the stay.

If you have filed more than one bankruptcy in a year, the stay only lasts a month and then you have to persuade the bankruptcy judge that you deserve a second chance at bankruptcy. The only way you would file more than one bankruptcy in a year is that the first was dismissed – typically when a Chapter 13 is dismissed for not making payments.