Tuesday, September 9, 2014

Automatic Stay: Filing Bankruptcy Will Stop Collection Calls and Garnishments


Many people considering filing bankruptcy have severely fallen behind on payment of their debts, and receive endless collection calls. Some people have fallen so far behind that the creditors have sued them, and have obtained, or soon will obtain, garnishments and liens. We are often asked whether filing bankruptcy will stop these collection calls and garnishments, or if they will have to wait until they actually receive their discharge.
Filing bankruptcy places the debtor under the protection of the automatic stay, which prohibits all creditors, with limited exceptions, who received notice from all collection activities. The automatic stay protects the debtor from all collection calls, and stops any pending garnishments. Any money taken by a creditor after the date of the filing must be returned, even if they creditor wasn’t aware of the filing when they took the funds. In some circumstances, we may be able to recover funds garnished prior to the filing of the bankruptcy.
Even after we have informed clients and prospective clients of these protections, we are frequently asked what happens if the creditors simply ignore the bankruptcy notice and continue collection efforts. The short answer is: they must! Except for particularly egregious violations, we will give creditors the benefit of the doubt, and assume they simply did not receive or process the bankruptcy notice. We will send the violating creditor a letter notifying them of the bankruptcy, and demand that they cease all further collection efforts. If this fails to stop collection efforts, we may send an additional warning or file a complaint in bankruptcy court. If we file a complaint in bankruptcy court, the debtor may be entitled to damages, attorney fees and costs. The filing of a complaint will often solve the problem, but it is possible that a hearing may be required to establish the violation.

If you are, or will be, behind on your bills, at threat of garnishment, and receiving endless, harassing collection calls, you should consider calling us to discuss your debt relief options. Initial consultations are free. Call 503-352-3692, or visit www.pacificbankruptcy.com