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Bankruptcy FAQ

Violations of your automatic stay by creditors: What can you do?

On Behalf of | Oct 9, 2019 | Chapter 7

Two of the most important things that Chapter 7 bankruptcy does is allow you to discharge many of your debts and stop creditors from trying to collect on debts during the pendency of the bankruptcy proceedings.

The latter is accomplished by an automatic stay. Under the law, if a creditor violates a stay, they can be sued for damages as well as for reimbursement of legal costs. Typically, these violations aren’t deliberate. The creditors may not be aware of the bankruptcy filing or be unfamiliar with the law.

Smaller businesses are more likely to be unaware of the point when collection efforts need to stop. Breaches of stay where the creditor can reasonably claim that they hadn’t yet been made aware of the filing usually aren’t actionable in court.

If you’re still receiving collection calls and/or notices after you’ve filed for bankruptcy, keep a record of them. It’s a good idea to keep your case number and the court venue handy to provide it to collectors who call, text or email you.

You should also make sure that all of your creditors have been properly notified of the filing. It usually takes at least a week for creditors to receive these notifications. If you’re facing foreclosure or repossession, it may be wise to personally notify a creditor of the stay rather than wait for them to be notified through the court.

If you’re having issues with creditors or collectors contacting you during your automatic stay, it’s essential to let your bankruptcy attorney know. They can help stop the notices and advise you whether or not you have a civil case against the creditor and/or collection agency.

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