If you are being harassed by creditors, it is important to realize that there are steps you can take to protect yourself. A court order, known as the automatic stay, could successfully get rid of all harassment and abuse from your creditors. Continue reading to learn more.
It is no secret that bankruptcy, both for individuals and businesses, is on the rise in the U.S. More and more hard-working people are finding it difficult to keep up with monthly mortgage payments, necessary living expenses, and more. Mounting debt can be frightening, especially when abusive creditors are constantly calling and contacting the borrowers in order to claim what is owed them. When a family simply cannot come up with the money to repay creditors, threats and abuse will not be successful. All it will do is make the individual more desperate and hopeless.
If this sounds like your situation, you should consider taking advantage of the bankruptcy tool, the automatic stay. Simply put, when an individual files for bankruptcy, there is an automatic injunction which makes it illegal for creditors to continue harassing those who have borrowed from them. The details of this court order are outlined in the U.S. Bankruptcy Code, 11 USC § 362. This court order protects the debtor from more than just creditor harassment. If the creditor has decided or already has begun to start judicial proceedings against the debtor, this will have to stop. They also will not have any authority to take any of the individual’s property.
What are some other benefits of an automatic stay? As a mortgage is usually one of the largest debts a person is dealing with, an automatic stay could remove the threat of a foreclosure. Unfortunately, this stay is not permanent, but it could temporarily put a stop on the foreclosure process and give the family more time to decide how to handle the situation. For tenants, an automatic stay could also help prevent them from being evicted. Due to new bankruptcy laws, however, this is more difficult than avoiding a foreclosure. Another tactic creditors may use is to garnish the debtor’s wages. An automatic stay is extremely effective in putting a halt to these actions.
If you are considering filing for bankruptcy, you will also need to be aware of what an automatic stay cannot prevent. If you are in debt regarding taxes and an IRS proceeding, an automatic stay cannot stop them from taking some of your income or even your property. Also, if there is a civil lawsuit currently against you in regards to a child support or paternity issue, the automatic stay cannot halt this from continuing. Those who took out a loan from their pension will also not be able to stop their income from being withheld. Whatever your specific case, remember that creditors can petition the courts to “lift" the automatic stay. They may attempt to argue that the stay is not serving its intended purpose and the judge may rule in the favor of the creditor.
In cases where the individual simply wants to be relived from the abuse or threats of a creditor, an automatic stay is not the only option they have. By filing a lawsuit under the Fair Debt Collections Practice Act (15 U.S.C. § 1692), the borrower could sue the creditor for their illegal debt collections practices and use the award to pay off their debt. Type of actions which are illegal include calling the debtor after hours, using abusive language, using deceit, publishing the debtor’s name and information, and much more. Other debt collection agencies may threaten the debtor with arrest or that they will contact the individual’s employer regarding their debt. If you have questions about how the automatic stay could help you or whether you have a case for filing a lawsuit under the Fair Debt Collections Practice Act, you should contact a bankruptcy attorney who has experience in these types of cases.