Many individuals filing for bankruptcy experience various types of collections efforts prior to filing. These collections efforts can include anything from harassing phone calls and letters to law suits and even garnishment. If you, or someone you know, is currently receiving phone calls or other collections efforts you should contact an attorney immediately.
Creditors can make certain efforts to collect debts, however, some types of conduct are illegal and the debtor may be able to recover monetary damages. Even if your situation does not rise to the level of damages, collections efforts can be frustrating, embarrassing, and even costly for a debtor.
Once you choose to retain an attorney you can inform your creditors that you are represented and provide your attorney’s name and contact information to the creditor. The attorney can then confirm representation and your creditor may stop contacting you. However, it is important to know that your creditor is not legally required to stop contacting you until you actually file your bankruptcy petition with the court.
Once your case is filed your creditors are not legally permitted to contact you or try to collect the debt from you. If your creditors continue to contact you please inform your attorney.
There is an exception to this general rule that creditors may not collect debts after filing. If you currently have a bank account with an institution that is also listed as an unsecured creditor (i.e. you have a debit card and a credit card with the same bank), the creditor can take the funds out of your bank account until the debt is satisfied in full. When filling out your debts you should check to see if you owe any money to your bank for anything: including, but not limited to, credit cards, overdraft fees, and/or personal loans. If you do you should inform your attorney who can provide advice accordingly.
While generally we are looking for unsecured debts, there are a handful of financial institutions that will block use of ATM or debit cards if you hold a secured debt (for example a car loan or home loan) with the institution pending a reaffirmation agreement. You should still be able to access your funds from a bank branch, but your debit card may not work. This is not the policy of every institution, but you may want to check with your financial institution prior to filing if the situation applies to you.
If you have questions, or would like to schedule a free consultation, contact a St. Louis Bankruptcy Attorney today!