While many people decide to file Chapter 7 or Chapter 13 bankruptcy precisely because they want to end creditor harassment, I still get the occasional consumer who expresses fear that the phone calls from debt collectors will continue. Some people believe that the harassment will grow even worse.
Ultimately, nothing could be further from the truth, because as soon as you file Chapter 7 or Chapter 13, the filing creates an injunction called an automatic stay. The stay expressly prohibits your creditors from taking any further collection actions against you or your assets, effectively ending phone calls, letters, lawsuits, garnishments, repossessions and threats of foreclosure. The automatic stay is not only powerful in ending harassment, but it can also carry stiff penalties for any creditors who violate it, including contempt, damages or sanctions.
There are a few exceptions to automatic stay provisions which a Maryland bankruptcy lawyer can help explain to you in reviewing your case, but generally speaking, the stay is designed to give all parties involved a little “breathing room.” The automatic stay works in the creditors’ favor too, as it is intended to make sure all your creditors are dealt with in a fair manner as opposed to one particularly aggressive debt collector gaining an advantage or taking precedence by calling more frequently than the others.
I have covered a few of the more popular bankruptcy myths this week, but are there other myths out there you would like to see discussed in future blog posts? Share your thoughts in the comments section below, and if you have any personal questions regarding your own situation and a possible bankruptcy filing, contact my office today to set up a free initial consultation.