How Filing Bankruptcy Helps With Creditors
One of the most difficult aspects about falling behind with your monthly payments is that you start receiving incessant phone calls, texts and emails from your creditors demanding payment of their respective bills. Nobody enjoys these types of actions and that is why it may help you to file for bankruptcy to get your life back in order. Let’s take a look at some of your rights as you file for bankruptcy.
Fair Debt Collection Practices Act
The Fair Debt Collection Practices Act gives you legal protection from abusive debt collection practices. For instance, debt collectors cannot do the following:
- Call you before 8 a.m. or after 9 p.m., unless you agree to it
- Contact you at your workplace if you tell them not to
- Use abusive or threatening language when attempting to convince you to pay their bill
- Talk to anyone except you and your spouse about your debt
Despite these minimal protections, however, debt collectors can make your life unpleasant at best and downright unbearable at worst. What if there were a way to stop this harassment.
Bankruptcy’s Automatic Stay
There is. When you file bankruptcy, the court notifies all your creditors of your bankruptcy filing and puts an automatic stay into effect. During this period, your creditors are prohibited from contacting you in any way for payment of their respective debts. The stay also stops foreclosure and repossession actions in their tracks.
Length of Stay
How long the automatic stay remains in effect depends on which type of bankruptcy you file. In all likelihood, you will file either Chapter 7 or Chapter 13. Chapter 7 is the simplest and accounts for around 70% of all personal bankruptcies filed each year. Chapter 13, a reorganization procedure rather than a discharge procedure, accounts for the other 30% or so.
The Chapter 7 stay usually lasts for 30 days from the date of your filing. In Chapter 13, however, the stay generally lasts for your entire bankruptcy period, usually three years, but also up to five years in some circumstances. If you would like to find a chapter 7 bankruptcy lawyer, you could consider a firm like Pioletti Pioletti & Nichols to help you out with any questions you may have.
The Chapter 13 Stay
The reason why the Chapter 13 stay is so much longer is because the whole purpose of Chapter 13 is to give you the opportunity to reorganize and pay down your debts, not necessarily discharge them. In Chapter 13, you and your bankruptcy lawyer devise a debt repayment plan whereby you make monthly payments to the court and the bankruptcy trustee disburses the money to your respective creditors. As long as you stick to your plan and make the required payments, your creditors cannot contact you personally and certainly cannot harass you for payments above and beyond those called for in your repayment plan.