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Limits of Debt Collectors after You Have Filed for Bankruptcy

debt collection.jpgRegardless who you are, financial hardships can be very stressful and make your life much harder than it needs to be. These hardships include debts from credit cards, student loans, utility bills or mortgages. Not only do these hardships cause you stress, they place immense pressure on your personal life, personal relationships and sometimes, loss of jobs. Although debt collectors are permitted to attempt to contact you in order to recover the debt owed, it is illegal for them to harass you.

The Federal Trade Commission and the Fair Debt Collection Practices Act define the legal and illegal actions taken by debt collectors. Debt collectors are not permitted to:

  • Harass you by using threats of harm or violence, use obscene language or repeatedly use the phone to annoy you;

  • Lie, misrepresent what you owe or make other false statements, such as falsely claiming they are attorneys or government representatives, when attempting to collect a debt;

  • State that you will be arrested or your wages will be garnished if you don't pay your debt; and

  • Try and collect interest or fees on top of your debt, or threaten to take your property unless it can be done legally.

Automatic Stay During Bankruptcy Proceedings

Commonly, when you file for bankruptcy, there is an automatic stay that prohibits most forms of collection activity, which includes legal action, garnishment and contact by phone or mail. The automatic stay is broad and encompasses nearly all attempts to collect debt acquired prior to bankruptcy. However, there are a few exceptions. These exceptions include child support enforcement, criminal cases, and even eviction cases. It is important to note that the automatic stay will not apply to any debts acquired after the filing of bankruptcy.

The Debt Collector Violates the Automatic Stay

If none of the exceptions identified above apply to the debt collector, then this collector has violated the automatic stay. If this is what happened in your case, you may have some options. These options include:

  • Informing the creditor of your pending bankruptcy, so that if they garnish your wages, they are required to return the amount to you. They are in essence correcting the violation;

  • Notifying the bankruptcy court if the collector does not stop attempting to collect its debt after you inform them of the pending bankruptcy. The court can sanction the debtor if the violation was willfully violated; and

  • Filing a separate lawsuit against the debt collector if they violate the automatic stay because they are violating the state or federal laws, such as the federal Fair Debt Collection Practices Act.

Contact an Attorney

If debt collectors are harassing you, even after you informed them of your bankruptcy proceedings, you should contact an experienced San Jose bankruptcy attorney who will advise you of the best course of action to combat harassing debt collectors and get you the peace of mind you deserve.

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