Receiving collection calls and letters causes stress and anxiety and can put your family on edge. Filing bankruptcy can put an end to the calls and letters, as well as stop wage garnishments and foreclosure proceedings. When you seek the protection of bankruptcy, the automatic stay goes into effect immediately upon the filing of your case. This legal mechanism prevents creditors from continued efforts at collection, and also prohibits them from contacting you about your debts.
When a creditor fails to abide by the automatic stay, the penalties are harsh. The following actions are prohibited:
- Collection calls: a creditor is no longer allowed to call you at home or work and ask for payment of a past due debt once a bankruptcy case is filed and the automatic stay in place.
- Wage garnishments: if your paycheck is being garnished, the judgment creditor must immediately withdraw the garnishment and is prohibited from issuing a new one. This means more of your hard earned money in your pocket and gives you a chance to breathe while trying to get your finances in order.
- Foreclosure actions: if your house is being foreclosed on, a bankruptcy filing will stop that action. This is especially helpful if a foreclosure sale is just around the corner.
When creditors disobey the automatic stay, they can be punished. In order to have punishment imposed, you can file a lawsuit within your bankruptcy case against the offending creditor. The Court will then determine the severity of the violation and impose an appropriate sentence. Most times the creditor is ordered to make financial payment to the debtor, in order to compensate the debtor for the damages caused. Possible damages include wages improperly garnished, loss of property, and emotional damages. Some Courts go so far as to award large amounts of damages, so that other creditors sit up and take notice that violations of the automatic stay will not be tolerated. A skilled bankruptcy attorney can help you develop your case against a creditor that fails to abide by the automatic stay, which gives you the confidence needed to see your bankruptcy case to finality.
If you are receiving collection calls or letters, call our office to get them stopped. Let an experienced attorney help you by explaining how bankruptcy will benefit you, and how the automatic stay prevents creditors from calling to collect a debt. Call a Bloomington, Minnesota bankruptcy attorney today.