Fighting Creditors With Bankruptcy

If you have ever missed a payment or experienced delinquent debt accounts, you probably know all too well the consequences that could follow. While creditors may be harassing you for payment, there are some things you need to know about how to fight back.

Debt Collections

Typically, the debt collection process starts out with a phone call or three. Most creditors will give you the benefit of the doubt that maybe you simply forgot to make your payment on time and extend you the courtesy of calling to remind you. While many people dodge debt collection phone calls, experts agree that this is bad practice. You should always answer, at least one, of these debt collection calls to find out who alleges you owe them money, how much the alleged debt is for, and when the payment deadline expires. Answering this call could be the difference in negotiating a payment plan or having your wages garnished, on the end of a lawsuit, or even have your assets seized.

Stop The Calls

There is only one way to get a creditor to stop calling: resolve the outstanding debt. However, how you resolve the debt can be accomplished in one of a few ways. Of course, you can pay the debt balance in full and be done with it, but chances are you can’t afford that route. You could also choose a debt consolidation or other negotiation option, but that doesn’t always come with an immediate halt to collection calls. Filing for bankruptcy can put a stop to collection calls, as well as any other consequences of delinquent debt like wage garnishment, lawsuits and asset seizure.

When you file for bankruptcy the court issues an automatic stay order, which prohibits creditors from contacting you or making further collection attempts. This order is served to your creditors, who are notified that they must now deal with your bankruptcy lawyer or the trustee. There is a meeting of creditors to allow for them to ask questions and make their claim for repayment, although many never show up. Once your debts are discharged the automatic stay order becomes permanent, making it impossible for the creditors to attempt to collect on that discharged debt in the future. However, it is important to note that any co-signers or joint parties on a discharged debt could still be held liable by the creditor. Therefore, it is important to discuss these types of jointly liable debts with your lawyer to ensure they take efforts to protect the other party.