Debtors who are behind on their mortgage, credit card payments, medical bill payments, car payments, or any other payment get hounded with phone calls and letters from creditors on a daily basis. One major benefit of filing a chapter 7 bankruptcy is the immediate relief that it offers in this regard.
Upon filing a Chapter 7 Bankruptcy Petition, all creditors must immediately cease any and all actions, including communication and lawsuit and collection efforts against you. If a lawsuit has been filed, it will typically be immediately dismissed.
In fact, under the "Fair Debt Collection Practices Act", creditors may not contact you if you have retained a lawyer to represent you. (§ 805. Communication in connection with debt collection [15 USC 1692c]). This provision applies whether you plan on filing bankruptcy or just want legal representation in any collection matter.
It is possible, yet somewhat rare, for Creditors to file a motion requesting the bankruptcy court to "lift" the automatic stay. But until an order is entered, creditors must not contact you or pursue any collection efforts.
Creditors must follow the Fair Debt Collection Practices Act provisions concerning how and when collectors contact debtors and what collectors say to induce payments. Failure to do so can result in civil penalties up to $1,000.00. In determining the amount of liability in any action, the court considers, among other relevant factors, the frequency and persistence of noncompliance by the debt collector, the nature of such noncompliance, and the extent to which such noncompliance was intentional.
For more information, contact The Fink Law Firm, LLC in Kansas City, Missouri or St. Joseph, Missouri at 816-505-1111.