One thing that many individuals who have debts hate is hearing the phone ring because it might be one of their creditors. The same is true for checking their email or postal mail. Some debt collectors are ruthless when it comes to trying to get what they’re due. Still, if you don’t have the money to pay them, the constant reminder that you owe money might be more than you can handle.
Filing for bankruptcy is one option that you have to put a halt to these collection activities. Once you file your case, the court issues an automatic stay. This forbids all creditors from using any collection options to try to get money out of you. One point to remember is that you legally can’t pay them anything once you file. As soon as you file, the debts are handled by the bankruptcy trustee.
The reason for the automatic stay is to ensure that there isn’t any favoritism with any creditors. There are specific factors that the court uses to determine when a creditor is paid and how much. By putting these payments in the hands of the trustee, each creditor will get their rightful due and not anything more.
If you still have a balance with the creditor when your bankruptcy is discharged, those balances are also discharged with very few exceptions. Any creditor who attempts to collect on a debt once you file for bankruptcy and the automatic stay is issued can face serious legal consequences. Be sure that you alert your attorney if any creditor does continue collection attempts.