Many companies start annoying collection activity as soon as you miss a single payment. In fact, you don’t even have to fall a full month behind. They might start calling you the day after the payment’s due date when it is still just a late payment and not yet a missed payment.
Collection activity can be stressful to the point of exhausting you emotionally. It can also make you feel anxious about every phone call you get and every knock at the door. Those coping with overwhelming collection activity may benefit from bankruptcy, as an automatic stay halts those efforts.
How bankruptcy helps
The same day that you file for bankruptcy, the courts where you submit your paperwork will send notice to the credit bureaus. Those credit bureaus, in turn, will send that information out to creditors. Many companies that engage in collection activity or provide revolving lines of credit to consumers purchase special services so that they receive notice of applicable bankruptcy filings within hours.
At the very least, if a creditor calls you by accident after you file for bankruptcy, they should note their internal records and cease doing so as soon as you notify them of your bankruptcy filing. Eventually, credit card balances, medical debts and many other unsecured debts will be eligible for a discharge. You may also need to think about taking action against creditors if they violated your rights.
The law limits certain kinds of collection activity
There are rules about what creditors and debt collection companies can do. From limits on how frequently they contact you to the times of day when they call and the things they say when you speak to them, there are many rules that apply.
If they threatened you, called you repeatedly at work when you told them doing so could cost you your job or otherwise harassed you, you may have grounds to bring a claim against them for violating your rights under the Fair Debt Collection Practices Act. Such claims can lead to financial compensation for you that also acts as a penalty for the company involved.
Considering your options can help you take the right steps when handling aggressive creditors and trying to regain control over debts that you cannot repay.