Can Bankruptcy Stop Credit Card Collections?
Bankruptcy CAN stop collection attempts from credit card companies that include lawsuits or other forms of legal action. The automatic stay offers protection from collection attempts and stays in place until your case is completed. The stay goes into effect when you file bankruptcy, either Chapter 7 or Chapter 13 .
The Automatic Stay
When you file bankruptcy and the automatic stay goes into effect, collection attempts from creditors should cease or stop. This includes phone calls, notices sent by mail, email and any other payment demands. The credit card company may not attempt to sue you or obtain a judgment against you. If a lawsuit was already filed against you, legal action associated with it ceases. There are exceptions to the automatic stay that should be considered.
In Chapter 7 bankruptcy the automatic stay may not apply to co-debtors. If you have a credit card and another person is named on the account as also being responsible for debt incurred, the credit card company may decide to purse them for payment; especially if the co-debtor hasn’t filed bankruptcy. If you file Chapter 13 bankruptcy the co-debtor may benefit from protection of the automatic stay, even if they don’t file for protection. This is often the case when credit card debt is considered consumer debt. Consumer debt relates to personal or household expenses such as utility payments, groceries and medical payments.
When the Credit Card Company Alleges Fraud
If the credit card company alleges fraud associated with your credit card this may affect the automatic stay. If you obtain a discharge from debt when your case is closed the automatic stay ends. At this point you will no longer be responsible for the debt. Questions or concerns should be reviewed with a qualified bankruptcy expert.