Why Creditors Hate Automatic Stay in Bankruptcy
Many times the decision to file bankruptcy is made because a consumer debtor is receiving too many collection calls or letters or is being sued by a lender. The constant calls can quickly escalate to the level of nuisance and filing bankruptcy may be the only way to get the phone to stop ringing. This is because the law does not allow lenders to contact you once you have filed for the protection of bankruptcy. There is a provision contained within the Bankruptcy Code referred to as the automatic stay and it is designed to do just what its name implies: automatically stays a creditor from contacting you. In this sense, the word “stay” is used in much the same way you and I would use the word “stop”.
Because creditors are not allowed to call you if you have filed bankruptcy, the automatic stay is perhaps the most beneficial part of any bankruptcy filing.
How Automatic Stay in Bankruptcy Works
- A case is filed and the instant it is filed the information is registered on the Court’s online case management system.
- The system assigns a case number to your filing and also records the date and time on which you filed your case.
- As soon as the case is entered on the system, the automatic stay is in place. This means you get the benefit of this powerful legal mechanism right away upon filing.
- The Court sends notice to your creditors, including the date and case number of your filing. This is made possible because when you visit with your bankruptcy attorney, you will be required to provide him with a list and contact information for all of the people and companies you pay each month. Those names get entered into the Court’s electronic system, and notice of your case is sent to everyone on the list. If you leave off a creditor by accident, you can direct them to your attorney to obtain your filing information, or you can give it to them in order to stop the calls. You will then be required to amend your case to add the creditor.
What if The Creditors Still Call After I File Bankruptcy and They Receive The Automatic Stay?
This type of notice system usually stops creditors from calling your or sending harassing letters to collect a debt. But not all lenders abide by the rules, and you might continue to get calls even after giving your bankruptcy information to one of your creditors. If that is the case, you can file a lawsuit against that particular lender in your bankruptcy case. The lawsuit is one for violating the automatic stay and the penalties are stiff. You are entitled to financial damages to be paid to you by the offensive lender for the damages you suffer as a result of the violation.
If you find your self constantly harassed by creditors, call us now at (916) 485-5444. We may be able to stop the harassment with bankruptcy and an automatic stay.