Fighting back against creditor harassment during and after bankruptcy
If you have outstanding debts, you may have already heard about the protections that you have against creditor harassment under the Fair Debt Collections Practices Act. These protections apply to all debtors regardless of whether or not they filed bankruptcy. However, what happens if you experience creditor harassment during or after your bankruptcy? Fortunately, you have significant protections if this occurs.
As soon as you file bankruptcy, the automatic stay immediately becomes effective. Once in effect, the stay prohibits your creditors from taking any action to collect a debt against you. This includes calling you, foreclosing on your house, repossessing collateral or filing a lawsuit against you in court.
In most instances, your creditors will obey the stay and stop trying to collect the debt against you. However, creditors sometimes intentionally or unintentionally violate the stay. If the violation consists of taking back collateral, such as a car repossession, you are entitled to request an order from the bankruptcy court for the return of the property.
Also, for all violations of the stay (not just ones involving collateral repossession), you can sue the creditor for damages, if the creditor knew or should have known that the stay was in effect at the time of the violation. Under the law, you are entitled to recover compensation for any actual losses you suffered. You may also recover the attorneys’ fees you accrued for asserting your rights. In rare cases where the violation was very extreme, you may also recover punitive damages and compensation for emotional distress.
Aside from the threat of having to pay compensation, creditors that violate the stay are also guilty of disobeying a court order. Accordingly, the creditor may face contempt of court proceedings. If found guilty, the creditor may be subject to fines and court costs.
Once you have completed bankruptcy, you have likely received a discharge of most of your pre-bankruptcy debts. This means that you are no longer under any obligation to repay them. However, some creditors may ignore the discharge order and attempt to get you to pay discharged debts by contacting you about them after your bankruptcy.
Fortunately, if this occurs, you are not powerless, as you have most of the same rights as you do for automatic stay violations. Specifically, you may sue the creditor to recover any actual losses you incurred plus attorneys’ fees. Also, the creditor may face contempt of court proceedings and be forced to pay fines and court costs as a result.
Illegally harassed? Fight back
Fortunately most creditors respect the law and conform to its requirements. However, if you have the misfortunate to encounter the few who do not, it is generally in your best interest to consult with an experienced bankruptcy attorney. In many cases, doing so will cost you nothing, as your legal fees will be covered by the creditor. An attorney can work to hold the creditor accountable for its unlawful activity.