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How Does Bankruptcy Stop Debt Collectors?

Posted By Allmand Law Firm, PLLC || 2-Dec-2013

Can I Stop the IRS from Collecting for Unpaid Taxes if I Can Not Pay?

Debtors looking for relief from constant phone calls and mailings from bill collectors may wonder about how bankruptcy protection works. You may see and hear advertisements on the television and radio about using bankruptcy to stop bill collection activity, but many may not understand how the process works or even realize they may qualify to obtain such protection.

When you file bankruptcy an injunction known as the automatic stay goes into effect. Debt collection attempts come to a halt. The action can stop foreclosure proceeding, stop repossession, and even cease legal activity against you such as wage garnishment and pending lawsuits.

Debt collectors are prohibited from continuing collection attempts against debtors. They would need to go to court to get permission to continue such as against you. If they continue without permission they could suffer repercussions since it would be considered breaking federal code. This means if you continue to receive phone calls or letters from creditors, make note of the activity and present it to your bankruptcy attorney.

If you qualify you can have unsecured debt such as medical bills, personal loans, and credit card debt discharged or eliminated. You will not be responsible for paying them and creditors cannot continue to collect on them once the court has discharged them. Creditors can face serious penalties for trying to collect from debtors in bankruptcy, and even after their case is closed. If you are struggling or overwhelmed with debt obligations, consider discussing your situation with a Dallas / Fort Worth bankruptcy lawyer to review your options.


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