If you are deep in debt and fall behind in your payments, you can face collection attempts from your creditors. This can include letters, harassing phone calls, wage garnishments, car repossession, home foreclosure, and other attempts to collect money.
This can be frustrating, stressful, and embarrassing. If you’re in debt, you don’t want your employer to know, and you need to maintain possession of your home and vehicle.
Fortunately, you have options to stop collections. Our bankruptcy attorneys at Daigle Law Office can help you explore your legal choices to stop creditors.
How Chapter 13 or Chapter 7 Can Stop Collections
One of the most effective ways to stop collections is to file for bankruptcy.
When you file either a Chapter 13 or Chapter 7 bankruptcy, the court immediately issues an order called the “automatic stay.” The automatic stay forces your creditors to cease their collection efforts immediately. For example, if your home is scheduled for foreclosure, the sale will be legally halted. At the same time, the bankruptcy is pending, which is generally two to three months.
An automatic stay can immediately stop creditors from taking action against you to collect on the owed debt. This can prevent the following from happening:
· Car Repossession
· Harassing Creditors
· Utility shutoffs · Wage Garnishment
Exceptions to the Automatic Stay
While an automatic stay can be helpful in many situations involving your creditors, there are exceptions to the rule.
For example, if the mortgage lender gets the bankruptcy court’s permission to proceed with the foreclosure sale by filing a “motion for relief from stay,” you may not get the entire three to four months. Even after that point, however, the bankruptcy will generally postpone the sale by at least two months, or possibly more, if the lender is slow in obtaining the motion for relief from stay.
Some other possible exemptions can include:
· Domestic support obligations: Child support, alimony, and spousal support payments can continue.
· Criminal prosecutions: Criminal actions against the debtor can proceed.
· Government actions: Tax collection, eviction for non-payment of rent, and certain regulatory actions can continue.
· Securities contracts: Actions related to securities contracts can proceed.
· Property not owned by the debtor: Creditors can take action against property that is not part of the bankruptcy estate.
Working with an experienced bankruptcy attorney is essential to determine if an automatic stay will stop collections. They can also help you if creditors fail to end their collection attempts and review your legal options.
What If Creditors Don’t Uphold the Automatic Stay?
While creditors are legally supposed to uphold an automatic stay, in some cases, they might continue to harass you, attempt to collect payments, or take legal action against you despite the bankruptcy filing.
There are many consequences for creditors who violate the automatic stay, including:
· Legal penalties: Creditors may face fines or other legal sanctions.
· Injunctions: Courts can issue orders prohibiting further collection activities.
· Attorney’s fees: Debtors may recover attorney’s fees incurred due to the violation.
· Punitive damages: In some cases, creditors may be liable for punitive damages.
If you believe a creditor has violated the automatic stay, it’s essential to contact your bankruptcy attorney immediately. They can determine what steps to take.
Hire Our Expert Bankruptcy Attorneys
If you’re experiencing collection attempts from creditors, get help from a bankruptcy attorney. They can help you determine how to stop collections. Contact Daigle Law Office today for a free and confidential consultation with Attorney Peter M. Daigle, a skilled and reputable bankruptcy and foreclosure defense attorney in Massachusetts. Call our Cape Cod office at 508-771-7444 or our Norwell office at 781-561-1220.
