Does filing a bankruptcy petition stop collections activity?
The filing of a bankruptcy petition, whether under Chapter 7 or Chapter 13, results in an "automatic stay" which stops non-exempt creditors from pursuing further collection activities.
The collection activities that can't be pursued after filing a bankruptcy petition include:
- starting or continuing a lawsuit against you
- enforcing a judgment against you
- taking possession of any of your property, or enforcing a lien against your property
- calling you, writing you, or using any other tactics to try to collect from you
- setting off debt owed to a creditor with amounts owed to you
This means that while the automatic stay is in place, your creditors cannot:
- start or continue a foreclosure action
- start or continue an eviction action
- start or continue any other type of lawsuit
- garnish your wages
- garnish your bank accounts
- call you or send you letters about your debts
- disconnect your utilities for non-payment
There are some types of things that are not subject to the automatic stay including:
- IRS audits
- alimony or child support obligations or proceedings
- criminal proceedings
- repayment of pension loans
Although the automatic stay will protect you initially, a creditor has the right to ask the Bankruptcy Court to lift the automatic stay. If that happens, the creditor could then proceed with collection activities once again. It's also important to note that if you filed a bankruptcy petition within the prior year, the automatic stay will only be in place for thirty days unless the Bankruptcy Court determines that the current petition was filed in good faither. If you have filed multiple bankruptcy petitions, the automatic stay may be apply.
This law firm is a debt relief agency. We help people in Connecticut file for relief under the Bankruptcy Code.