Receiving a collection call is stressful. Even more stressful is when those calls persist. If you are struggling under insurmountable debt and are receiving ongoing collection calls, know that there is help available for you.
Stop Collection Calls
Unfortunately, it is not illegal for debtors to call you when there is a genuine debt to collect. That being said, when it borders on harassment, there is definitely something you can do. If you or someone you know is receiving collection calls, pay attention to the following:
- Debt collectors are only allowed to contact valid customers. To note: It is not uncommon for debt-free consumers to receive harassing debt collection calls. You’ll want to double check the debt is actually owed.
- Debt collectors need to honor the Do-Not-Call registry where listed phone numbers may not be contacted.
- Debt collectors must leave a valid identity and contact details for the company on whose behalf they are making collection calls. This means they must identify what company they are collecting debt for.
- Messages about bad debt cannot be left with friends, family, or relatives of the customer.
- Requests in written form to stop making collection calls have to be honored.
There are several ways to stop debt collection calls. One of them is to get in touch with a skilled bankruptcy attorney who understands the laws when it comes to stopping the harassment. A professional can guide you on how to communicate with debt collectors and what definitive action to take when communication efforts fail. One of the options available to you is bankruptcy.
One of the most beneficial parts of filing for bankruptcy, apart from actually receiving a discharge of debts, is an automatic stay.
The Automatic Stay
An automatic stay is put in place when you file for Chapter 7 or Chapter 13 bankruptcy. This automatic stay prohibits most creditors from continuing with collection activities and can provide welcome relief to debtors. In some ways, an automatic stay can be one of the main reasons people decide to file for bankruptcy. In many ways, it allows a debtor to regroup.
What an Automatic Stay Protects
An automatic stay can protect a debtor from some common emergencies that happen when you file for bankruptcy.
Utility disconnections. If you’re behind on a utility bill and the company is threatening to disconnect your water, electric, gas, or telephone service, an automatic stay can prevent that for at least 20 days.
Foreclosure. An automatic stay temporarily stops foreclosure proceedings. But it’s important to remember that most likely the creditor will be able to proceed with the foreclosure sooner or later.
**Eviction.**The automatic stay may offer some help if you are in danger of being evicted.
An automatic stop will not help if the landlord alleges that you’ve been endangering the property. A landlord is also able to ask the court to lift the stay, thus allowing the eviction to proceed.
Collection of overpayments of public benefits. If you receive public benefits and were overpaid, the agency is allowed to collect the overpayment from future checks. An automatic stay prevents this collection from your future check. If you become ineligible for the benefits, the automatic stay will not prevent the agency from denying or terminating benefits for that ineligibility reason.
Multiple wage garnishments An automatic stay stops garnishments.
What Cannot Be Prevented
An Automatic Stop can prevent the issues listed above but there are a number of things it cannot prevent. A bankruptcy lawyer can help walk you through the particulars of your situation.
There are some instances in which an automatic stay won’t help you. Here are a few:
Certain tax proceedings. The IRS can still audit you, issue a tax deficiency notice, demand a tax return, issue a tax assessment, or demand payment of such an assessment. The automatic stay does stop the IRS from issuing a tax lien or from seizing your property or income.
Support actions. An automatic stay does not stop a lawsuit against you that seeks to establish paternity or to establish, modify, or collect child support or alimony.
Criminal proceedings. The criminal component will not be stopped by the automatic stay. Criminal proceedings that can be broken down into criminal and debt components will be divided. Example: if you have been convicted of writing a bad check and thus sentenced to community service and ordered to pay a fine, your obligation to do community service will not be stopped by your filing for bankruptcy.
Loans from pension. Money to repay a loan from certain types of pensions and IRAs can still be withheld from your income despite the automatic stay.
Multiple filings. The stay automatically terminates after 30 days unless you, the trustee, the U.S. Trustee, or a creditor asks for the stay to continue.
Creditors Can Still Get Around Automatic Stays
Just to note: a creditor can usually get around the automatic stay by asking a bankruptcy court to remove, or “lift” the stay.
When you’re facing a large amount of debt, it can feel insurmountable. Should you file for bankruptcy? How does bankruptcy work? As always, it’s advised that you work with a phoenix chapter 7 bankruptcy lawyer or phoenix chapter 11 bankruptcy lawyer to help you determine if bankruptcy is the next step for you, or if there are other options for you.
Overview of Chapter 7 and Chapter 13
Chapter 7 (also known an straight bankruptcy) is the most common form of bankruptcy and is available to consumers and businesses.
Under Chapter 7, assets are sold off so that the proceeds can go to paying debt. All proceeds from the sales of those assets are handed over to a trustee, who then pays down any and all creditors. After all creditors have been paid off they are no longer able to collect funds directly from you and your debts are cancelled, meaning you are no longer responsible for them.
You are not able to discharge the following debts under Chapter 7:
- Alimony and child support
- Drunk driving judgments, criminal fines, restitution
- Debts incurred as the result of fraud or intentional wrongdoing
- Back taxes under 3 years old
- Student loans
- Recent purchases made for substantial amounts
- Contracts involving titles or liens such as land or automobiles
Chapter 13 reorganizes debt so that you are able to pay back debts over the next three to five years. This pay-back plan is called a debt repayment schedule. Based on your income, and how much you owe, you’ll repay 10-100% of the debt you owe.
You are not able to discharge the following debts under Chapter 13:
- Alimony and child support
- Drunk driving judgments
- Criminal fines
- Student loans
Reasons to File Chapter 7
Chapter 7 bankruptcy should be chosen if the following apply:
- You have no hope and have no future hope of being able to repay any debts
- Your debts do not have co-signers on them
- You are going to be sued by creditors
- You don’t qualify for Chapter 13
Reasons to File Chapter 13
Chapter 13 bankruptcy should be chosen if the following apply:
- You have already filed Chapter 7 in the past six years
- Your debts have cosigners
- You will be able to pay your debts within three to five years
- Your income disqualifies you from filing for Chapter 7
- You need relief from collection proceedings and you want to pay your creditors back but just need some breathing room to get your finances under control
- You want to be able to file a Chapter 7 bankruptcy some time in the future
- You are behind on your mortgage
- You owe back taxes
- You have assets that could be liquidated in Chapter 7
- You’re a farmer with debt not related to your farming operations and do not qualify for Chapter 12
Working with a Bankruptcy Attorney
Bankruptcy can be an overwhelming process. That’s why we advise that you work with a phoenix business bankruptcy lawyer that is familiar with various debt repayment options. We are committed to helping our clients understand their rights and options under the bankruptcy law and developing the debt relief solution that makes the most sense for each individual. We invite you to call (602) 648-3274 or contact our Arizona office to schedule a free initial consultation.
668 N. 44th St., Ste 320, Phoenix, AZ 85008