Frequently Asked Questions About Debt Collection And Bankruptcy

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Can my creditors put me in jail for not paying my debts?

No. In Pennsylvania, creditors (other than taxing authorities) cannot jail you for not paying your debts. Moreover, they cannot even legally threaten you with jail. However, please note that this does not mean that creditors cannot initiate criminal proceeding against you if you violate the law, such as writing a bad check.


My creditors keep calling. Can I make them stop?

Yes. Although creditors are allowed to try to collect their debts, they must do so carefully without violating the law. When a bankruptcy petition is filed with the court, every creditor listed in the petition will be notified that you have filed for bankruptcy. As a result, according to the law, they must stop calling you. If they keep calling or harassing you, you may be entitled to compensation.


What happens when a family member or a friend co-signs with me on the loan?

For those who don't know, a co-signer is a person who agrees to accept legal responsibility for repayment of a loan with the original borrower. This means that a co-signer will be responsible for the full amount of the loan, if you (the borrower) will fail to make payments. Important thing to note is that bankruptcy will only excuse the borrower from paying the debt. Thus, if borrower files for bankruptcy protection, the co-signer will still be obligated to pay any outstanding debt remaining at the conclusion of borrower's bankruptcy.


What happens when I cannot make my car payments?

If you realize that you cannot make car payments as agreed in your contract, the lender has the right to repossess the vehicle. A lender can repossess your car even if you're only one day late on the payment. If your car is repossessed it is possible to file for bankruptcy to recover the car and pay the creditor over time. If you don't file for bankruptcy, the creditor has the right to sell your car and sue you for deficiency balance left on the loan after the car is sold.


Do I owe lender money even if I give them back the car?

Probably, yes. Most vehicles depreciate rather quickly and as a result they are worth less than what you borrowed in order to pay for it. As such, after you give the car back, it will be sold at an auction. If the auction price will not be enough to cover the loan balance, you will be responsible for the difference.


Is it possible to transfer some of my property to my relatives to protect it from the creditors?

No, this tactic will not work. This is a very common misconception amongst debtors. Transferring property to a relative or a friend with intent to shield it from the creditors is fraudulent and can be reversed. Not only will such transfers can be reversed, you may end up being fined or prosecuted for your misconduct. Your best option is to seek advice from a bankruptcy lawyer.


I've heard about different chapters of bankruptcy. What is the difference between each of them?

Most consumers file for bankruptcy protection under Chapter 7 or Chapter 13. The law allows for individuals to keep most (if not all) of their property and personal belonging up to a certain dollar amount. In Chapter 7, if your personal property is worth significantly more than what the law allows you to keep, then it will be sold at an auction and that money will be distributed to your creditors. Most Chapter 7 cases last about 3 months, at the conclusion of which you will receive a discharge that will erase many of your debts. In a Chapter 13 case, you will be allowed to keep all of your property regardless of value, but you must file a plan with the court promising to make payments and repay a portion of your debt. During the time of the repayment plan, the law forbids creditors from initiating collection proceedings without permission from the court. Most consumers who file Chapter 13 are those who fall behind on their mortgage payments and want to avoid foreclosure.


Can my employer fire me if I file for bankruptcy?

No. The law provides specific protections against this type of conduct by employers.

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