Tips For Dealing With Creditors During Your Bankruptcy

Posted on: 13 September 2017

Have you been dealing with unsettling communication from creditors asking for their money? Bankruptcy is one way you can stop this from happening, but it doesn't happen instantly. It is important to know how to deal with creditors during the entire bankruptcy process.

Before Filing

You might have started the bankruptcy process by hiring an attorney but have not yet filed the official paperwork for bankruptcy. This phase is known as pre-filing, and creditors are still allowed to reach out to you about collecting the debt that you owe until you file.

Keep in mind that creditors must always follow the proper laws about debt collection no matter how much you owe. You are not allowed to take action against creditors reaching out in the pre-filing stage, but you should notify them that you're going to file for bankruptcy so that they are prepared.

Do not take your creditors up on any offers to negotiate your debts even if you have not filed, since this happens in the bankruptcy process when assets are liquidated. In fact, you could be seen as giving preferential treatment to creditors and the debt will be recovered through a clawback.

After Filing

You should cease communications with all creditors after you have officially submitted your bankruptcy filing. A judge will prevent creditors from contacting you by informing them of your intentions to file for bankruptcy through an automatic stay.

An automatic stay may be issued right away, but creditors may not receive the notice for several days or weeks. Therefore, you may still be contacted by a creditor that is unaware of your bankruptcy filing. Simply tell them you've filed for bankruptcy and that a judge has issued an automatic stay.

If a creditor is persistent about talking to you about a debt, you can feel free to have them contact your attorney.

After Dismissal

Creditors should not be contacting you again regarding a debt once it has been dismissed. The purpose of bankruptcy is to give your finances a clean slate so that you can recover from debt. Creditors won't be happy that they are unable to collect your debt, but you have a right to use bankruptcy to protect you in situations like these.

For help navigating the bankruptcy process, reach out to a local attorney that specializes in these types of cases at firms like Haven Law Group, P.C. You may be surprised at how an attorney can make the entire process go smoothly.