Your rights when creditors harass you during or after bankruptcy
Some creditors may continue to collect debts while the automatic stay is in place or after the debtor has completed bankruptcy and received a discharge. What are the debtor's rights when this happens?
March 07, 2013
Your rights when creditors harass you during or after bankruptcyArticle provided by William G. Schwab and Associates
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One of the benefits of filing bankruptcy is that upon completion, it gives the debtor a discharge, meaning that he or she is no longer legally obligated to pay many debts that existed before the bankruptcy. Another benefit is the automatic stay, which prohibits creditors from working to collect most debts (e.g. making collection calls to the debtor) while the bankruptcy is pending.
However, like many things in life, bankruptcy does not always go off without a hitch. Some creditors may continue to collect debts while the automatic stay is in place or after the debtor has completed bankruptcy and received a discharge. What are the debtor's rights when this happens?
Automatic stay violations
Occasionally creditors may continue collection activities such as lawsuits, phone calls and repossessions after the debtor has filed bankruptcy. Under bankruptcy law, this is called a violation of the automatic stay. The law provides penalties for such violations. First, any action that a creditor takes which violates the automatic stay is void, meaning that the bankruptcy court has the power to reverse the action. Additionally, the court can order that any property that the creditor sold or took away be returned to the debtor.
In addition to reversing the action, debtors may file a lawsuit against the creditor to recover damages for violations, if the debtor can show a willful violation of the automatic stay. To do this, debtors only have to show that the creditor knew that the automatic stay was in effect. Under the law, debtors may recover attorney's fees, actual damages and, in some cases, punitive damages or damages for emotional distress.
Finally, because the automatic stay is a court order, creditors that violate the stay can face sanctions for contempt of court. Sanctions can include fines and attorney's fees.
Discharge violations
Once the debtor has completed the bankruptcy process and has received a discharge, he or she is no longer obligated to pay many of the debts existing when the bankruptcy was filed. Unfortunately, this does not always put an end to the phone calls and other forms of creditor harassment.
The debtor's rights when this happens are somewhat more limited than for violations of the automatic stay. Under the law, the debtor cannot file a lawsuit to recover damages. However, the debtor can ask the court to hold the creditor in contempt for violating the discharge. If the court holds the creditor in contempt, it can order the creditor to comply with the bankruptcy discharge and award sanctions such as attorney's fees, court costs and compensatory damages.
If you have filed bankruptcy and are still being harassed by creditors, it is important to contact an experienced bankruptcy attorney. An attorney can stop the harassment and ensure that your right to a fresh start is protected.