Harassing phone calls from creditors and collection agencies can be intimidating and stressful. It could result in personal bankruptcies, unstable marriages, job losses, and invasion of privacy. Although debt collection and verification activities are legal, harassment by original creditors and debt collectors are illegal under California bankruptcy statutes. The California Fair Debt Collection Practices Act (FDCPA) regulates the times creditors can call, the information they should provide during the call, and how often they can reach out regarding debt.
Federal law also, through the FDCPA, offers protection to Californians from debt collector harassment. The majority of creditors and collection agencies understand these laws. However, some don’t understand the rules and engage in unfair and unreasonable debt collection processes.
Bankruptcy can help stop harassment from creditors by triggering automatic stay, which stops collection agencies and creditors from foreclosure or debt collection activity. When protected by the automatic stay laws, creditors should only contact your bankruptcy attorney. The Los Angeles Bankruptcy Attorney can handle all your bankruptcy concerns and ensure appropriate and fair debt collection by the people you owe in Laguna Hills.
The Rights of Creditors in Bankruptcy
When faced with financial hardship, you only think of ways of getting out of the situation. You want to save your position at the expense of the creditor through bankruptcy. Although bankruptcy offers you protections, creditors have rights that the court considers when deciding if they have engaged in unfair practices. These rights include:
Right to Participate in the Distribution of Bankruptcy Estate
Creditors collect their debt when you file for bankruptcy by being part of the bankruptcy estate sale and distribution. You should avail a list of all the people you owe money and state the amount. The trustee assigned to you by the court will then prepare a priority list on the payments distribution. Your creditors have the right to be involved in the process of recovering part or all their debt.
Right to be Heard by the Court Concerning Your Debt Repayment Plan
When you file bankruptcy under Chapter 13, with the help of your Laguna Hills bankruptcy attorney, you develop a repayment proposal that is acceptable to both the court and creditors. The creditors have the right to know your plan and their concerns about the program addressed by the court.
Right to Contest Debt Discharge
When you declare bankruptcy, either under Chapter 7 or 13, you have the right to be forgiven the remaining debt. Debt discharge is the only way you can avoid paying part of the debt you owe creditors. However, before the court grants the discharge, it must be in the creditor’s best interest. If a creditor doesn’t want to forgive you some debt, they will oppose the petition in court.
Failure to disclose all your debts can be a basis the creditor can use to challenge the debt discharge. Also, the court will not violate the creditors’ rights when accepting your petition. For this reason, you should list all your debts when filing a petition or try and settle the matter with creditors before moving to a bankruptcy court.
Filing bankruptcy right doesn’t guarantee creditors won’t make harassing phone calls. They might sell the debt to debt buyers who will reach out to try and collect the money. The best you can do as a debtor is to retain a Laguna Hills bankruptcy attorney to protect you from all forms of creditor harassment.
Definition of Creditor or Debt Collector Harassment
The CFDCPA protects debt consumers from unfair debt collection and verification practices by original creditors and the debt collectors or buyers. FDCPA, on the other end, protects debt consumers from unfair practices by collection agencies, including debt buyers and debt collectors.
Many creditors or collection agencies don’t understand these laws, while others choose not to follow them. So, it’s critical to understand what these people you owe money can or cannot do to avoid harassment.
You can tell if your creditor or collection agency is employing unfair debt collection practices if:
- They call you at odd hours.
- They contact you after sending them a notice of ending contact or refusal to repay debt. Once a creditor receives this notice, they can only communicate when notifying you of a suit.
- They make multiple harassing or annoying phone calls.
- They contact you directly instead of your attorney after declaring bankruptcy.
- They try to contact you at your place of work.
- They reach out to a third party other than your attorney or spouse.
- The amount they are demanding wasn’t in the initial contract.
- They utilize misrepresentation of facts when collecting what you owe them.
- Publishing your personal information like name or address on a bad credit list
- They use abusive language.
- Making a phone call without identifying themselves as a collecting agency or creditor
Remember, you cannot pay the debt in the first place because you are undergoing a challenging time like divorce, illness, or job loss. Harassment from creditors or collection agencies is the last thing you want because it will press you against the wall leaving you feeling defeated.
Fortunately, you can stop the harassment and even bring the debt collectors to justice. However, to achieve this, you must speak to a Laguna Hills bankruptcy attorney to explain how filing bankruptcy can help.
Handling Creditor Harassment After Bankruptcy
Bankruptcy can be a great solution if you are dealing with harassment from collecting agencies or creditors. Debt collection can be overwhelming, thus the need for bankruptcy to protect you from debt collection activities. Unluckily, even after bankruptcy, some creditors will come after you to collect what you owe. It can be frustrating, especially if you expect them to obey the court’s order not to demand payment. Fortunately, there are remedies to the harassment.
Bankruptcy and Automatic Stay
By declaring bankruptcy, you trigger the automatic stay potent tool that offers protection against harassment from creditors and debt collectors. The court injunction makes it illegal for the people you owe money to take any action against you during bankruptcy. Further, creditors are not allowed to:
- Foreclose on your home
- Contact you via phone, letter, or email.
- Continue or file a suit.
- Call you
- Garnish your wages
When the judge approves your bankruptcy petition, you will notice a reduction in debt recovery activities. The majority of creditors understand the meaning of automatic stay and won’t try to communicate unless through your Laguna bankruptcy attorney. Some who haven’t been notified of the bankruptcy are likely to continue with debt recovery actions. Although this isn’t illegal, once you send a notice to these creditors, they should stop the harassment. If the collection activities continue, you should take action.
If bankruptcy is ongoing, a creditor can only talk to you through your bankruptcy attorney. When they reach out directly, speak to your Laguna Hills bankruptcy attorney to file a lawsuit against the creditor for violating the automatic stay statutes.
Besides, you need to consult with your attorney because automatic stay doesn’t protect you from all debts. The automatic stay won’t protect you against:
- Loans from pension
- Criminal hearing
- Tax proceeding
- Support actions like lawsuits seeking to prove paternity or child support
- Multiple filings
The Bankruptcy Discharge Injunction
If the court enters a discharge order, the stay changes into a permanent discharge injunction. It means the lender, either a corporation or individual whose debt has been discharged, can no longer demand debt. However, there are still techniques the lender can use to get in touch for debt collection. The techniques include:
- Pressuring you to obtain another credit to replace the previous one
- Incorporating the new loan with the previous one
- Bringing a suit against you
- Repossessing your car or foreclosing your house
- Failing to indicate debt discharge on your credit report until you clear what you owe
- Sending you a notice action on the discharged debt
Stay safe by having an experienced Laguna Hills bankruptcy attorney by your side to explain your options to stop creditor harassment.
The Differences Between Dismissing and Discharging Debt
Remember that a discharge order by the court doesn’t eliminate all your debt. It only forgives part of the debt. If your creditor harasses you after a discharge, you can take legal action against them for a violation of the law. However, to know you are being harassed, you must differentiate between debt dismissal and discharge.
The majority of bankruptcy cases in Los Angeles, CA, end up in a dismissal or discharge. Most individuals undergoing the process aim for a discharge because it relieves the debtor’s obligation to settle dischargeable debts. The dischargeable debts include credit cards, mortgages, personal loans, and medical bills. However, note that if a debt is not dischargeable, the bankruptcy outcome will be a dismissal.
The reasons for dismissal are:
- Not completing all your official documents.
- Not providing your trustee with tax return forms.
- Refusal to cooperate with a bankruptcy trustee
- Failure to attend creditor or Sec. 341 meetings
- Not making the payment or obtaining approval of a payment plan.
If the court dismisses your discharge request, creditors will regain their right to take debt recovery action. It will be as if you never filed a petition because you won’t have the automatic stay’s protection.
If a creditor is still taking action geared towards debt recovery, call your Laguna Hills bankruptcy attorney right away. The legal experts will review the case and see if the court gave a discharge order. If yes, the attorney can call the creditor in person and request them to stop the harassment because it is a violation of the discharge injunction.
Some creditors might continue with the harassment even after the demand from your attorney. The best action to take at this point is to request the court to reopen the bankruptcy case and order new sanctions. You could also seek compensation for the damages stemming from the creditor harassment.
Apart from having your case dismissed, your creditors can recover non-dischargeable debts. These debts are not dischargeable under any bankruptcy form. Some of the debts are not discharged automatically. Others will not survive any of your petitions in court requesting a discharge.
To avoid surprises when creditors come calling for their payments, you must understand the dischargeable and non-dischargeable debts in your situation. Your Laguna Hills bankruptcy attorney can shed more light on non-dischargeable obligations so that you can be prepared to clear them after bankruptcy.
The automatically non-dischargeable debts are:
- Victim restitution and court fines in criminal cases
- Student loans
- Debts obtained through DUI offenses
- Income tax returns
- Long overdue alimony and child support
On the other end, the court will not issue a discharge order if your creditor contests the discharge of the debt. Some of these debts that won’t be discharged if your creditor opposes include:
- Debts accumulated through malicious and deliberate conduct
- Credit card debts accrued due to luxury products, services, or cash advances.
- Debts obtained through embezzlement
- Debts omitted in the bankruptcy forms.
Life After Declaring Bankruptcy
As mentioned earlier, you do everything possible to get out of your financial situation at the creditor’s expense. The creditor, on the other end, will go to any extent to recover what you owe. If they have exhausted all avenues, they might opt for a lawsuit to force you to pay. Fortunately, if you have already declared bankruptcy, they will drop the case. However, if the creditor doesn’t drop the lawsuit, you must comply with court procedures.
Talk to a Profound Bankruptcy Attorney Near Me
While debt collecting agencies and creditors can employ various tactics to force you to pay a debt, they are bound by particular laws. If you are unsure if a creditor’s actions are legal or are being harassed to pay a debt, you may want to talk to a local attorney. At the Los Angeles Bankruptcy Attorney, we will guide you through the bankruptcy process and stop creditor harassment. Talk to our legal practitioners today at 424-285-5525 to end unfair debt collection practices.