If your creditors and are calling and sending written notices for payment, you may be relieved to hear that when you file for bankruptcy, all collection attempts stop immediately. When you submit a petition with the court, an automatic stay goes into effect, barring any further collection attempts against you.
“The automatic stay is one of the fundamental debtor protections provided by the bankruptcy laws. It gives the debtor a breathing spell from his creditors, stopping all collection efforts, all harassment, and all foreclosure actions. It permits the debtor to attempt a repayment or reorganization plan, or to be relieved of the financial pressures that drove him into bankruptcy.” (Senate Report No.95-989)
Your creditors may only contact the court administering your bankruptcy or your lawyer once the automatic stay goes into effect. If a creditor contacts you after they have been notified of the existence of the automatic stay, you have grounds to make a legal complaint.
Creditors may ask the court for relief from the stay, usually if the creditor believes the collateral is being exposed to undue risk. If the right is granted, this means the creditor would have the right to seize the collateral or make further attempts to collect on the debt.
The automatic stay also stops foreclosure and eviction actions being taken against you. In a Chapter 13 bankruptcy, you will have three to five years of a court-approved repayment plan to catch up on any past due rent or mortgage payments. If you want to remain in the home, you will have to continue to make the current payments.
If your vehicle was recently repossessed, the lenders would have to return the vehicle to you while you go through the bankruptcy process. During your repayment period, you will have to keep current with the payments if you wish to continue to use the car.
If you have bill collectors calling and asking for payment and you have no answers for them, contact a Dayton bankruptcy attorney to find out how you can get debt relief and stop the creditor’s calls.