If you cannot pay your bills and other financial obligations, and if you are being harassed by creditors through phone calls, wage garnishments, and utility disconnections, bankruptcy could be the best option for you.
Even before bankruptcy, the law protects you from harassment by bill collectors. Bill collectors may not harass you to collect money. They are prohibited from, for example, contacting you at unreasonable times at home, embarrassing you by telling your employer, family, or friends about your debt, or contacting you at work if they know that your employer does not approve. Bill collectors are only permitted to contact your lawyer, if you have one.
After bankruptcy, you are granted added protection from bill collectors and creditors. An “automatic stay” will be ordered by the court and will prevent most further action against you by creditors, collection agencies, and governmental bodies.
An automatic stay will typically stop:
- Foreclosure of your house
- Eviction from your apartment or house
- Utility disconnection, such as electric, gas, or water
- Lawsuits
- Wage garnishment
- Repossessions, such as of your car
- Phone calls demanding payment
In addition, you are protected by law from losing your job because you filed for bankruptcy.
If your creditors attempt to contact you, demand payment, or continue their collection activities during your bankruptcy, they could be subject to harsh fines and even punitive damages.
After the bankruptcy is complete and your debts have been discharged, take care when dealing with former creditors. Some unscrupulous creditors will attempt to contact you after your bankruptcy and ask you to renew your debt. Do not sign any agreement saying that you will repay your debt. If creditors contact you in this manner, consult with your lawyer.
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