Creditors are legally required to stop collecting debts from you once you file for bankruptcy. The bankruptcy court will order an automatic stay when you file your bankruptcy petition. The automatic stay protects you from creditors calling you and harassing you. Once you file your bankruptcy petition, your creditors receive notice about your bankruptcy from the court.
The notice informs them that it is illegal for them to contact you in any manner. Unfortunately, many creditors will ignore this notice and continue to contact you, violating the automatic stay. In these situations, it may be possible for the debtor to receive compensation for the harassment they have endured.
What is an Automatic Stay?
When you file for bankruptcy, the court will put an automatic stay into effect. The automatic stay will state that your creditors cannot contact you to collect your debts since you filed for bankruptcy. As a result, it becomes illegal for creditors to collect from you through phone calls, emails, letters, text messages, or any other contact. Creditors who continue collection activity after a debtor files for bankruptcy violate the law unless they have received specific approval from the bankruptcy court.
Deliberate Violations of the Automatic Stay
When a creditor willfully violates the automatic stay, the bankruptcy court has the authority to sanction the creditor. As the debtor, you do not need to prove that the creditor intended to violate the automatic stay order. Instead, you will only need to prove that the creditor intended to collect debts in violation of the automatic stay. The bankruptcy court has the legal authority to sanction an automatic stay violation. To sanction the creditor, the following elements need to be fulfilled:
- The automatic stay order was in force at the time of the collection activity
- The creditor violated the automatic stay order
- The creditor was aware of the bankruptcy and did not obey the court’s order to stop collection activities
- The creditor did not correct their action after becoming aware that the debtor had filed for bankruptcy
- The creditor intentionally tried to collect on a debt
Collection Calls After Your Debt Has Been Discharged
Once the bankruptcy process is complete, the bankruptcy court will discharge the majority of your debt. Some credit companies will continue to try to collect on your desk even though the court has discharged them. According to Section 524 of the U.S. Bankruptcy Code, nobody can take action against you as long as your debt has been discharged. Creditors cannot contact you about payments for your discharged debts. When creditors violate the court’s discharge order and continue to harass you after you have already completed the bankruptcy process, there are multiple legal actions you can take against the creditor.
In some cases, a bankruptcy attorney may simply write a demand letter to the creditor informing them that you have already completed the bankruptcy process if your debts have been discharged. In some cases, a demand letter from an attorney’s enough to get the creditor to stop contacting you. Once your creditors are made aware of the bankruptcy, they must immediately stop their collection efforts. In other cases, the creditor may continue harassing you. You may need to take legal action against the creditor for violating a court order in these situations.
Enforcing Automatic Stays
What happens if you keep getting calls from creditors after filing for bankruptcy. In this case, it is time to act. Sometimes the stress of receiving constant calls leads people to become paralyzed and not know what to do. Unfortunately, you cannot assume that creditors will stop after filing for bankruptcy. They may not know that you filed for bankruptcy, or they may not care and continue harassing you anyway. Reaching out to a bankruptcy attorney for help right away can help you immensely.
Your attorney will follow up to ensure that the system gets updated and take legal action against any creditors who continue to break the law by ignoring the automatic stay in your case. A bankruptcy attorney can also warn the creditor of possible sanctions that the bankruptcy court has a right to impose on them if they keep contacting you. In most cases, these warnings are enough, but if you keep being harassed, your attorney can ask the bankruptcy court to impose sanctions such as fines, attorneys fees, and payment for damages.
Compensation for Harassment by Creditors After Filing for Bankruptcy
Sometimes people are surprised to learn that they may obtain compensation from creditors who violate bankruptcy law by continuing to harass them. When a court discharges your debt, it will enter a discharge injunction. A discharge injunction is a legal order forbidding creditors from collecting on the debt to the creditor.
When a creditor violates a court order by trying to collect on the debt, the debtor can bring a lawsuit against the creditor under the U.S. Bankruptcy Code. According to the bankruptcy code, there are several different types of compensation a debtor can obtain from a creditor who has wrongfully continued to you try to collect from them, such as:
- The creditor may have to pay fines
- The creditor may have to pay damages to you
- The creditor may have to pay your legal fees
- The courts may order the creditor to pay additional punitive damages if they acted willfully or egregiously
When a creditor violates the automatic stay by continuing to collect from you, i i’s essential to seek assistance from a San Diego bankruptcy lawyer as soon as possible. You may have a right to obtain compensation under the US bankruptcy code. Depending on the facts in your case, you may have additional claims to compensation through other federal and state laws.