How Bankruptcy Affects Debt Collection Efforts

Once you have filed for Chapter 7 Bankruptcy, creditors must stop all efforts to collect debt upon receipt of notification of such filing. Your mortgage lender must halt the foreclosure process, if it has begun, upon notification as well. Staying (or halting) of creditor actions is one of the ways you are protected after you initiate the Chapter 7 Bankruptcy process.

As part of the bankruptcy filing process, you are required to submit a list of creditors. The bankruptcy court uses this list, also called a schedule, to assist with the notification process. From the time you file until notification is sent takes a few weeks, so creditor actions may not halt right away. However if you have an attorney, you can enlist your attorney’s assistance in the notification process. The next time you are contacted by a creditor attempting to collect on a debt, simply request that the creditor contact your attorney for assistance.

If a creditor does not halt efforts to collect on your debt after being notified, that creditor could be liable for any court imposed penalties and associated legal fees.

Disclaimer: The general information presented here relates to Chapter 7 consumer bankruptcy. This discussion is incomplete and does not involve consumer debt restructuring as defined under Chapter 13 bankruptcy; a different type of bankruptcy filing. The information presented is not meant as a legal opinion and should not be used as a substitute for legal advice. For detailed information regarding Chapter 7 consumer bankruptcy, refer to your state’s bankruptcy laws. For specific and complete information regarding how state bankruptcy laws affect your personal situation, it is advisable to seek independent legal representation.