The Automatic Stay: Stopping Harassment from Creditors
As experienced College Station bankruptcy lawyers, we know that many debtors face harassing phone calls and letters and even lawsuits from creditors pressuring them for payment. Whether you file under Chapter 7 or Chapter 13, one of the many benefits of bankruptcy is the protection of the automatic stay. The automatic stay is an order from the bankruptcy court to your creditors requiring them to stop collection efforts. The stay goes into effect as soon as you file your bankruptcy petition. The bankruptcy clerk will send the order, known as an Order of Relief, to all of your creditors to notify them of your bankruptcy filing.
While the stay is in effect, instead of contacting you directly, your creditors must communicate with you through your College Station bankruptcy lawyer. Your creditors cannot initiate lawsuits against you or pursue pending lawsuits. They cannot enforce a judgment against you and must stop enforcement activities that are already under way.
Most creditors will abide by the automatic stay and stop bothering you because they can be penalized for violations. If a creditor violates the stay, you may be able to recover compensation from the creditor for damages caused by the violation, including attorneys' fees. If the behavior by the creditor is especially egregious, the bankruptcy court may award punitive damages in addition to actual damages.
The automatic stay is subject to some exceptions. Two that affect many debtors are child support collections and set offs. If you are paying child support through a wage deduction, it will continue to be deducted from your paycheck. When you have an account and a debt at the same bank, the bank can take money from your account to pay the debt. Therefore, before you file for bankruptcy, you should open an account at a bank where you have no debts and remove all your money from the old account.
If you have secured debt, such as a car loan or mortgage, you won't receive statements from the lender while the stay is in effect. If you want to keep the property secured by the debt, you should continue to send in the payments as scheduled.