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In a NutshellThe automatic stay goes into effect as soon as your bankruptcy petition has been filed with the court and a case-number assigned to your case. The automatic stay prohibits creditors from trying to collect a debt from you. Creditors and their attorneys know that the bankruptcy court can order them to pay sanctions to the bankruptcy filer if they violate the automatic stay.
The automatic stay goes into effect as soon as your bankruptcy petition has been filed with the court and a case-number assigned to your case. The automatic stay prohibits creditors from trying to collect a debt from you. More on that here.
Creditors and their attorneys know that the bankruptcy court can order them to pay sanctions to the bankruptcy filer if they violate the automatic stay. From a practical point of view, there are two “types” of violations of the automatic stay that a filer deals with: (1) calls and/or debt collection letters, and (2) continuation of legal action, such as a pending lawsuit, garnishment, foreclosure or repossession.
The bankruptcy court notifies your creditors via U.S. Mail, so there is a few days between the date your case is filed and the date the creditor gets Form 309A from the court. That’s when most post-bankruptcy calls happen because the creditor does not yet know that the automatic stay has taken effect.
Answer the phone and tell the person you’re speaking to that you have filed for bankruptcy protection. Be ready to provide the person your bankruptcy case number and ask for the person’s name. Jot down the creditor, name of the person that called, date and time of the call and keep that piece of paper handy.
Most times, this is all that is needed to stop future calls. At this point the creditor has actual knowledge that the automatic stay protects you, even though they haven’t received the official court notice yet. The good news is, actual knowledge is all that’s needed. Once the creditor knows about your case, they know. Anything after that is an intentional violation of the stay.
If the creditor (and if they have one, their attorney) is properly listed on your creditor matrix and it’s been less than 2 weeks since your case was filed, chances are this was mailed out before the creditor received the court notice. Note the date you received the letter on the envelope and put it with the rest of your bankruptcy documents. Chances are, you’ll never need to do anything with it again. But, if the creditor continues to violate your rights, this first letter may just end up being your Exhibit A in court.
You should be aware that state law generally requires creditors who hold a secured debt, like a car loan or mortgage, to send regular statements and notices about the debt. So, whether you’re keeping or surrendering the property that is securing the debt, expect to continue to receive correspondence from the lender.
Since these notices are legally required and their primary purpose is not to get you to pay the debt but rather to inform you of what’s going on with it, they are not a stay violation. Carefully review what you received - chances are you’ll see a phrase like “this is not an attempt to collect a debt” on the document.