The automatic stay in bankruptcy may feel like a children’s game, but the protections it offers are serious business.
You file for bankruptcy with the expectation that your creditors are going to buzz off. They can’t call, write or in any way ask you to pay a pre-bankruptcy debt.
There are some exceptions to the rule, but for the most part you’re persona non grata.
But as with anything else, there are rules to follow when it comes to the automatic stay.
Notice, Notice, Notice
If a collector calls you after you file your bankruptcy case, they can get in trouble with the court only if they knew about your bankruptcy case.
No knowledge, no problem. The court figures they made a mistake, and shouldn’t be punished.
That’s one of the many reasons why it’s important to list every single debt you owe, and to provide every possible address for each of the creditors. You’re required to list every creditor on your bankruptcy papers anyway – why not do it right?
When I file a bankruptcy case for one of my clients, here are the steps I take:
- read the bill to find out the name and address of the creditor;
- if the creditor has an official mailing address to receipt of bankruptcy notices, use that on the bankruptcy schedules;
- if the creditor does not have an official mailing address to receipt of bankruptcy notices, call customer service and get a good address for the creditor if I don’t already have one;
- list every one of the creditor’s addresses I can find – including, if need be, the corporate headquarters;
- list all debt collectors that have ever been involved with each debt;
- review the credit report to list all debts shown there; and
- pick my client’s brain to find out any other possible creditors – and list them.
This is imperfect, but it’s the best means I’ve found for giving notice of the bankruptcy filing. Once the case is filed, the clerk will automatically send notices to listed creditors, collectors, and anyone else listed on the schedules.
Creditors Who Keep Calling Get Whacked
If a creditor has notice of your bankruptcy filing, they can’t claim they made a mistake.
If a creditor contacts you after notice, their actions are automatically assumed to have been intentional.
You have the ability to sue for violations of the automatic stay. You can get money for damages as well as for your legal fees.
That’s right, the creditor pays your lawyer.
Most important, however, is the fact that you can get the creditor to stop contacting you. The money’s nice, but the critical piece of the puzzle is the peace of mind you get when the phone stops ringing and the letters stop coming.
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