One of the most awesome effects a chapter 7 bankruptcy filing brings consumers is the immediate disruption of debt collection activities. This means no more letters, phone calls, threats, lawsuits, and more. Unfortunately, some debt collectors may not comply. Read on for some reasons why you are still being contacted about debts and how to handle the situation.
The Automatic Stay
After you file, the automatic stay goes into effect. A stay, in legal terms, means "stop" and this order is directed at your creditors. If they continue to contact you after you've filed, give them a few days to get the notice and then contact your bankruptcy lawyer. Some creditors are slow to stop contacting you for various reasons. Never ignore notices from creditors – give them to your lawyer and have them take legal action.
The Discharge Injunction
After you've attended the creditor's meeting and fulfilled your educational requirements, you can expect to receive your final discharge. This discharge prompts a second notice to creditors informing them of the discharge of the debt. This order is meant to serve as official notice that they can no longer try to collect the debt in question.
Examine Your Discharge for the Following
There are some circumstances where creditors may contact you after a filing and after the discharge. Take a look at your bankruptcy paperwork and examine it for the following situations:
1. Reaffirmations – This means that you agreed to continue paying the debt after the filing and discharge. Often associated with an auto loan, a reaffirmation can allow filers to hang on to the property as long as they promise to continue making payments. If you fall behind on reaffirmed debts, collection actions are unaffected by a bankruptcy filing.
2. Timing of the Debt – Some people take advantage of the time period right after a filing to seek more debt before the bankruptcy appears on their credit report. Any new debts you entered into after you filed and that were not listed on the matrix are not discharged and are subject to collection attempts.
3. Debts That Cannot be Discharged – Some debts are bound to linger after a bankruptcy. If you have any of the following forms of debt, don't expect discharge or coverage by the automatic stay:
- Student loans.
- Some federal and state tax debts.
- Back child support and spousal support.
- Legal debts and fees.
- Victim restitution.
- Debts that were fraudulently obtained.
- Debts you did not list on your matrix.
Speak to Your Bankruptcy Attorney
Your bankruptcy law firm should be consulted when an unexpected debt situation arises after a filing. They will review your documents and advise you on taking action against the creditor, if pertinent. Often, a quick phone call from the lawyer to the creditor accomplishes a great deal. Violators can face sanctions from the court if they fail to comply.