In some cases, though it is a hard decision, many consumers are forced to file for bankruptcy
. When you do not make your payments on time creditors will call repeatedly and try to collect your debt. This can mean numerous calls several times per day from various companies all trying to collect a debt. The high call volume is stressful and aggravating.
According to law once you file bankruptcy your creditors cannot harass you with phone calls. The Automatic Stay Law makes it illegal for creditors to continuously harass consumers once they have filed bankruptcy. Regardless of the amount of the debt the creditor must refrain from contacting the consumer about debt once it has become part of a bankruptcy proceeding.
Creditors are not allowed to contact consumers by phone, mail or through a third party representative once the individual has filed for bankruptcy. By law creditors cannot enforce a lien or pursue legal action. The United States legal system recognizes this law as true and valid and it is listed in Section 362 of the United States Bankruptcy Code.
Any individual who wants to find out more about the law or who thinks their rights have been violated by a creditor can find the information they need. Your immediate protection from your creditors begins as soon as you file bankruptcy. The bankruptcy court may take up to ten days to notify your creditors about your bankruptcy petition.
Though you are still protected by law but your creditors may not be aware of your situation immediately. As a good rule of thumb you should contact each of your creditors and inform them about your current situation. For many people the automatic stay may give them a little more time to take care of pressing financial matters. For instance if you are facing foreclosure, the automatic stay will stop the proceedings even if just temporarily. You should show your creditor your bankruptcy documentation especially if your house is already on the market or about to be sold.
According to the automatic stay laws consumers are protecting from wage garnishments and harassing collection calls. Any individuals who is involved in legal matters with a creditor due to an unpaid debt is protected from legal action. You should be aware of the situations where the automatic stay law does not apply
If you have broken the law the automatic stay law does not provide protection for criminal proceedings or convictions. You should be aware that the IRS does occasionally have the right in certain tax proceedings to contact you for financial information or to collect a debt.