Last Updated on February 21, 2021 by James Gentile
There’s nothing more stressful than receiving harassing phone calls and threatening letters in the mail from creditors. It’s bad enough as it is that you owe the debt, to begin with. That’s stressful enough in-and-of-itself, so the last thing you need is constant reminders to increase your stress and anxiety level, especially daily reminders.
When you file for bankruptcy, the good news is that all of those stressful phone calls and letters in the mail stop. And that’s thanks to the protection provided to you by the United States Bankruptcy Code.
The Automatic Stay – Complete Halt of Collection Activity
Collection activity will come to a complete halt when you file for bankruptcy due to the protection of the “automatic stay.” This bankruptcy provision prohibits any creditor from further collection activity. This type of protection protects you from the collection activity of any government entity, creditor, landlord, or collection agency.
Other ways you’re protected include:
- Utilities: The threat of any utility disconnection includes electric, gas, water, and telephone.
- Eviction Process: It may protect you from eviction; however, due to new bankruptcy laws, you may have a challenge. If an eviction judgment has already been issued, the automatic stay will not pertain to your particular situation.
- Foreclosure: Filing for bankruptcy can provide you with immediate protection from foreclosure. If you’re facing foreclosure, consider speaking with an attorney in regards to Chapter 13 bankruptcy. It provides more protection to homeowners who don’t want to lose their homes.
- Public Benefits Payment Collection: If you received an overpayment of public benefits, these benefits’ collection activities would cease when you file.
- Wage Garnishments: Bankruptcy protects you from wage garnishment immediately.
Exceptions to the Automatic Stay
What bankruptcy can do is help you avoid losing your home to foreclosure, solve and stop credit card harassment, resolve all debt, including medical bills, utility payments, automobile payments, etc. Not only will the harassing phone calls and letters in the mail stop, but you can then work on rebuilding your credit while you’re free from creditor harassment.
The Fair Debt Collections Practices Act – What It Is and How It Works
The Fair Debt Collections Practices Act was officially established in 1977 and provided protection to consumers from abusive debt collection practices. It was added to Title VII of the Consumer Credit Protection Act as an additional consumer protection amendment.
This act was put into place to protect consumers from harassment and creditor abuse and promote fair debt collection practices. Furthermore, consumers are provided with a means of disputing debt or obtaining debt information.
Creditors are to follow and adhere to strict guidelines set forth by this act, or they face the possibility of a penalty or remedy in the event of abusive debt collection practices.
Conduct Prohibited by Creditors
Thanks to the protection of the Fair Debt Collections Practices Act, creditors are prohibited from the following types of practices and actions:
- Contacting consumers after 9 pm or before 8 am.
- Continued communication after written notice requesting a cease of communication.
- Repeated phone calls.
- Attempting communications with consumers protected by an attorney.
- Contacting a consumer who has filed for bankruptcy.
If you still have questions, please contact us today.