Post-Filing Communication From Creditors After Bankruptcy
Generally speaking, creditors do not have the right to contact a debtor after they have filed bankruptcy. Once the creditor has received notice of a debtor’s bankruptcy filing they are barred from contacting the debtor or attempting to collect on any debt owed. However, there is a gray area where certain types of communication may be allowed.
In a recent Chapter 13 bankruptcy case, a couple who was behind on their mortgage payments filed bankruptcy. After the bankruptcy was filed, the mortgage lender contacted them via letter to inform them of an increase in their escrow payments. The escrow payments included the money reserved for the debtors’ homeowner’s insurance and property taxes. The bankruptcy debtors accused the mortgage lender of violating the bankruptcy automatic stay by sending the letter. However, the bankruptcy court disagreed saying that certain types of communication are allowed after a bankruptcy has been filed.
The bankruptcy court argued that because the creditor was only communicating a change in payment amount and did not include an invoice for payment, they did not violate the automatic stay. The bankruptcy court also argued that because the communication was a benefit to the debtors in their efforts to formulate a feasible Chapter 13 bankruptcy plan, it was allowable.
If the increase in escrow payments was made because of the bankruptcy filing or if the creditor attempted to coerce the debtor into making a payment, they would have been in violation of the automatic stay. However, because the creditor was only communicating beneficial information, the communication was allowed by the bankruptcy court.