Will Bankruptcy Stop Creditor Harassment in Texas?

Bankruptcy can be a great way to get a fresh start. It’s not right for everyone, but a Plano bankruptcy attorney can help you understand your options and rights and whether bankruptcy is the right choice for stopping creditor harassment.

Will Bankruptcy Stop Creditor Harassment in Texas?

When you owe money that you can’t pay back, creditors start calling, sending letters, and eventually threatening you with legal action. It can be very overwhelming to be harassed in this way.  Creditors have also been known to push the boundaries of what’s legal, and threatening violence or using abusive language or illegal under federal law. The Fair Debt Collection Practices Act (FDCPA) is designed to protect people from unfair tactics, but the truth is that not everyone is aware of their rights and not all creditors follow these rules.

The stress and strain of the situation can make you feel desperate. That’s why it’s so important to talk to an attorney. An attorney can help you understand what your rights are, help you put a stop to harassing collections, and tell you whether bankruptcy is really the best choice for you. Here’s how bankruptcy can help:

Bankruptcy and the Automatic Stay

When you file for bankruptcy, you are essentially asking the court to either erase some of your debt or to create a plan where you can pay it over time. There are two main types: Chapter 7 and Chapter 13. Chapter 7 is harder to qualify for, but it does wipe out many debts. Chapter 13 does not wipe out your debt, but it does set up a payment plan and may even reduce some of your debt. Whichever type of bankruptcy you are pursuing, credit or harassment can be stopped through something called the “automatic stay.”

An automatic stay goes into place as soon as you file for bankruptcy, and this is a legal shield that stops most creditors from contacting you. This means they cannot send you letters, call you, contact your friends and relatives, or initiate a lawsuit against you. This automatic stay will apply to medical debt, personal loans, credit cards, and some other types of debt.

Things to Know About a Stay

A stay won’t stop collections for child support or certain taxes. Also, bear mind that if a creditor does not know that you have filed for bankruptcy, they might keep contacting you until they are notified. The court will send a notice to all creditors that you list in your paperwork telling them about the automatic stay and warning them against contacting you, but it’s not uncommon to forget to list a creditor on the paperwork. If you find that a creditor has been forgotten, talk to your lawyer.

One more thing to be aware of is that some creditors may not believe that you really don’t have the assets to pay them back. If they think you’re hiding assets or lying about your situation, they can petition the court to lift the stay. They can also bring a petition to lift the stay if they can show that you are doing something to endanger collateral that could be used to pay your debt, or if they can show that “irreparable harm” will be done to them by not collecting the debt immediately. This last is fairly rare and difficult to prove, particularly with the big banks and companies that typically own credit card and personal loan debt. However, your lawyer can make sure that you have all the evidence needed to prove to the court that the state needs to remain in place.

What Happens If Creditors Ignore the Stay?

Most legitimate creditors will stop contacting you as soon as they know about the automatic stay. Unfortunately, there are sometimes outliers who ignore it, and if a creditor keeps harassing you after they’ve been notified, they are breaking the law. Your lawyer will report this to the bankruptcy court, and the creditor could face some serious fines and penalties for ignoring the law.

If they continue with the harassment, you might even be able to sue them for damages if you can prove that they caused you harm. If any creditor is contacting you after the automatic stay has gone into place, keep records of all communication you receive from them in case you need to prove that the creditor is violating the court order.

Chapter 7 vs. Chapter 13

The length of your automatic stay depends on what type of bankruptcy you are filing for. In Chapter 7, the stay usually lasts for a few months until all your debt has been discharged. Once the discharge is completed, creditors can’t ever contact you about those debts again. In Chapter 13 bankruptcy, it’s common for the automatic stay to last from 36 to 60 months as you pay down your debt. During that time, your creditors cannot harass you as long as you’re sticking to the plan.

The automatic stay is powerful, but it does have limits and doesn’t stop all types of debt collection. As mentioned above, it doesn’t set you free from all tax debt or from any domestic support obligations you have, like child support or alimony. If you have debt related to criminal activity, like fines or restitution, that is also not blocked by an automatic stay.

Is Bankruptcy the Right Choice?

Bankruptcy can stop creditor harassment, but it’s not the only solution available, and it may not be the right solution for you. It’s critically important that you work with a lawyer to explore all your options before you file for bankruptcy. Bankruptcy has some long-term consequences, so while it is a great option for some people, it’s not a good option for others. Here are a couple things your lawyer can help you explore:

Debt Settlement

Debt settlement is where you negotiate with the creditor to pay less than you actually owe. Your lawyer can talk to your creditors for you and offer them either a lump sum payment or a reduced payment in exchange for closing the account. Not all creditors will agree to this, and a lump sum payment requires you to have some money to offer, but this can be a good way to stop harassment in some cases. A lawyer can make sure that any agreement you reach with the creditor is fair and legally binding so you don’t risk any future harassment.

Debt Consolidation

Debt consolidation is when you combine multiple debts into one loan that has a lower interest rate. Lower interest can mean that payments are easier to manage, plus you’ll only be paying one entity instead of multiple, which makes it easier to keep track. Some debt consolidation programs offered on TV or over radio advertisements are scams: always ask your lawyer for a reputable consolidation program here in Texas. Your lawyer can also review the terms to make sure that you’re not going to pay any high fees unexpectedly.

Working With a Plano Bankruptcy Attorney

An attorney can help you explore all your rights in this situation and understand whether bankruptcy is a good choice. If you’re feeling overwhelmed by debt collectors, contact the Pelley Law Office, LLP right away. We have over 80 years of combined experience to put to work for you.

Contact Our Texas Bankruptcy Law Firm For Help Today

If you’re facing bankruptcy in Texas, we’re here to help. Contact the experienced bankruptcy lawyers at Pelley Law Office, L.L.P., today to schedule a free consultation.

We proudly serve Plano, Dallas, Sherman, and the surrounding areas.

Pelley Law Office L.L.P. – Plano Office
Address: 1312 14th St, Plano, TX 75074
Phone: (972) 608-0335
Hours: 24/7

Our firm is located near you. Find us with our GeoCoordinates: 33.0180322,-96.6952916,863

Pelley Law Office L.L.P. – Sherman Office

Address: 905 N Travis St, Sherman, TX 75090
Phone: (903) 813-4778
Hours: 24/7

Our firm is located near you. Find us with our GeoCoordinates: 33.6445846,-96.6113141,857