Will Bankruptcy Stop Debt Collector Harassment?

Will Bankruptcy Stop Debt Collector Harassment?

Being in debt is stressful enough without the constant calls and pestering of debt collectors. Will Bankruptcy Stop Debt Collector Harassment? A benefit of filing for bankruptcy is that the creditors and debt collectors will be required to stop all collection efforts against you. This is called “automatic stay”, and it is a powerful tool to help you through the bankruptcy process. Automatic stay affects much more than just debt collector calls. Here is a list of some of the other benefits:

  • If you are behind on utility bills and the company is threatening to disconnect your water, electricity, gas, or phone service, automatic stay will prevent utility disconnection for at least 20 days.

  • The foreclosure of a home mortgage will temporarily stop.

  • If you receive public benefits and were overpaid, usually agencies can collect payments from your future checks, but automatic stay prevents this from happening.

  • Filing for bankruptcy stops multiple wage garnishments.

  • Filing stops the IRS from issuing a tax lien or seizing property or income.

Automatic stay does not affect a variety of other issues. The IRS can still audit you, issue tax deficiency notices, and demand payments. Child support and alimony lawsuits will continue unhindered. Criminal proceedings will not be stopped, even if they include debt-related crimes. Certain types of pension loans are unaffected by automatic stay. You may still be evicted from your home if the landlord has already passed judgment. Also, a creditor can get around automatic stay by requesting that the bankruptcy court remove it. This will most likely occur if bankruptcy is filed immediately before a major collection is due, such as the foreclosure of a house.

If all you want to do is stop debt collection calls, there is another option. Under the Fair Debt Collection Practices Act, you can send a written request that you want the collection agency to cease all communication with you. As a result, all agency employees are prohibited from contacting you, except to tell you that collection efforts have ended or that you are about to be sued. However, this solution only helps against debt collectors, not the creditors themselves.

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