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The automatic stay in personal bankruptcy cases

| Jun 7, 2021 | Bankruptcy, Chapter 13 Bankruptcy, Chapter 7 Bankruptcy

When Mississippi residents file Chapter 7 or Chapter 13 bankruptcy petitions, the judge assigned to the case issues a Notice of Filing. This causes an injunction known as an automatic stay to go into effect, which prevents creditors from attempting to collect unpaid debts for the duration of the bankruptcy proceedings. It also puts a halt to debt-related wage garnishments and lawsuits. Creditors that violate automatic stays can be held in contempt of court and ordered to pay the bankruptcy petitioner damages and compensate them for their legal expenses.

Notifying creditors

Large creditors like big banks and credit card companies subscribe to services that inform them when automatic stays are issued, but debt collectors and smaller lenders may not learn about a Chapter 13 or Chapter 7 bankruptcy until they receive notification in the mail. This is why it is not unusual for collection calls to continue for a few days after the Notice of Filing date.

Keeping records

While these calls may be irritating, they are not usually actionable. However, it is a good idea for bankruptcy petitioners to keep track of collection calls and give the callers their bankruptcy case number. If the calls continue, legal action to hold debt collectors accountable for violating the automatic stay may be warranted.

Legal help during a bankruptcy

If you are struggling with an unmanageable financial situation and would like to pursue a fresh start, an attorney with debt relief experience could explain the bankruptcy process and clear up the many myths surrounding it. An attorney could also notify your creditors by certified mail when an automatic stay is issued and take legal action to recover your repossessed property. If any of your creditors willfully violate the automatic stay, an attorney could ask the court to award punitive damages in addition to compensatory damages and attorney’s fees.