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What to Do if Creditors Disobey the Automatic Stay

Posted on in Bankruptcy

What to Do if Creditors Disobey the Automatic StayFiling for bankruptcy provides relief in many ways, and one of the immediately noticeable ways is the automatic stay on creditors. After you have filed, creditors are legally required to stop contacting you or attempting to collect on their debt. This includes:

  • Calling you or sending letters
  • Foreclosing on or repossessing your property
  • Turning off your utilities
  • Garnishing your wages
  • Filing or continuing a lawsuit

The IRS is still allowed to send notices of tax deficiencies, and the automatic stay will not stop a court action that is trying to establish child support. Otherwise, you should stop hearing from creditors in a matter of days, if not immediately. If a creditor continues to harass you after you have filed for bankruptcy, you need to talk to your bankruptcy lawyer about how to stop the creditor and whether you should take legal action against them.

Determining Your Response

How you respond to a creditor continuing their debt collection action against you depends on whether the creditor knowingly violated the automatic stay. On your end, you can check whether you forgot to include the creditor in your bankruptcy filing, which would explain why they were unaware of the automatic stay. If the creditor is already listed in your bankruptcy, you need to notify them of the automatic stay and tell them to cease all communications and debt collection efforts. Your lawyer can prepare the message to make sure that the creditor can confirm your bankruptcy case. Warning the creditor will be enough to stop them in many cases. 

Legal Action 

If the creditor persists after you warned them, you may be dealing with a willful violation of the automatic stay. Your next step is to discuss with your attorney whether you want to pursue the creditor for the violation and possibly seek damages, which could include:

  • Costs related to collection actions the creditor took
  • Attorney and/or court fees
  • Pain and suffering caused by the harassment

At the very least, the court should order the creditor to stop their collection efforts and to return assets they may have seized from you.

Lifting the Stay

A creditor can petition the bankruptcy court to lift the automatic stay, allowing them to continue their collection efforts. However, the court will not lift the stay without you knowing. You will have the opportunity to contest the creditor’s motion. A motion to lift the automatic stay is most likely to happen when there is an asset, like your home or your car, that is collateral for the debt.

Contact a Collin County Bankruptcy Attorney

When dealing with aggressive creditors, you need a bankruptcy attorney who can stand up to them and protect your rights. A Frisco, Texas, bankruptcy lawyer at The Page Law Firm has extensive experience with successful bankruptcy filings and dealing with creditors. Schedule a free consultation by calling 214-618-2101.

Source:

https://www.law.cornell.edu/uscode/text/11/362

National Association of Consumer Bancruptcy Attorneys State Bar of Texas
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