When a debtor files bankruptcy, the creditors to whom they owe money are supposed to stop trying to collect. But as you may have guessed, that's not always what happens. Sometimes, the creditor in a bankruptcy case takes their chances and attempts to pry some money out of the debtor even after they have filed bankruptcy. Some debtors who don't understand the bankruptcy process or who are so overwhelmed because they are going through the process without a bankruptcy attorney, end up making payments to a creditor.
This is unfortunate because sometimes the payments made by the debtor can really upset their already fragile financial condition. And even though the law says that creditors who violate the automatic stay should be punished, the punishment meted out against violators is mild or non-existent because debtors often don't realize what happened and don't file a complaint.
So to help current and future debtors avoid the traps of bankruptcy automatic state violators, below are a few tips:
- A debtor is not obligated to make any payments to any of their creditors once they file bankruptcy. Even if the creditor calls and makes threats against the debtor, they still are not required to make payments after their bankruptcy has been filed.
- The creditor cannot simply repossess any of your property without a court order after you have filed bankruptcy. This means that even if you failed to pay your mortgage, once you file bankruptcy, the mortgage lender must get permission from the bankruptcy court if they want to file foreclosure. Even then they may not be able to file foreclosure if you come up with a feasible plan to repay your delinquent mortgage and keep your house through bankruptcy.
- If a creditor violates the automatic stay after you file bankruptcy, you must inform them in writing that you have in fact filed bankruptcy and should not be contacted. You can tell them verbally; but also send a letter just in case you need to present this evidence to the bankruptcy court if they don't cease with their illegal behavior. The bankruptcy court will look at the debtor's due diligence to inform the creditor of their bankruptcy before they will be willing to grant any damages.