What should I do if a creditor demands payment after I’ve filed my case?

As soon as you file bankruptcy, an automatic stay order is issued by the bankruptcy judge. The automatic stay means that creditors (people you owe money to) have to stop all efforts to collect the debt and cannot begin new efforts to collect such as filing lawsuits. The list of things creditors cannot do during the automatic stay period is long:

  • Call you on the telephone
  • Send you letters, texts or emails
  • Repossess any property you own
  • Foreclose on your home
  • File a new lawsuit or continue one that is already in existence
  • File any liens on any property you own

Despite this rule, however, some creditors do not follow the stay and continue to try to collect the debt through various means. Sometimes it just takes time for the automatic stay order to move through the system, especially in large, bureaucratic organizations. But, if after a few weeks you are still receiving harassing phone calls and letters, you may need to get your bankruptcy lawyer involved by having them send letters to the creditor warning them. In extreme cases where the creditor refuses to stop harassing you, the bankruptcy judge can issue monetary sanctions of the creditor until they stop.

Once your bankruptcy is over and the bankruptcy judge issues the final discharge of all of your debts, the temporary stay turns into a permanent discharge injunction under 11 U.S.C. § 524. When this happens, the creditors can no longer do the things they usually do to attempt to collect the debt. The debt has been wiped clean in the discharge order so it no longer exists. However, there are some techniques that the old creditor may do in order to try to collect on the old debt:

  • Pressuring you to enter into a new debt to replace the old, discharged debt;
  • Adding the old debt onto a new loan;
  • Refusing to show the debt as discharged on your credit report until and unless you agree to pay the debt;
  • Attempting to repossess on property you own;
  • Filing a new lawsuit attempting to collect on old, discharged debt.

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