Creditors’ harassing phone calls and letters, wage garnishments, and pending lawsuits against you must cease immediately upon the filing of your Chapter 7 bankruptcy petition in Illinois.
This rule arises from the “automatic stay” provisions of the U.S. Bankruptcy Code, which immediately enjoin these debt-collection practices once your bankruptcy case has been filed. The beauty of this “automatic stay” is that it truly is automatic—it applies to your creditors immediately once your case is filed. Of course, your creditors will need to be notified of this filling before they will stop collection efforts, but technically the injunction is effective immediately.
Once your bankruptcy petition is processed by the court, the Will County clerk sends notice to all the creditors listed on your bankruptcy schedules. Most of the big credit card companies and banks subscribe to a centralized electronic database that allows them to receive this notification within a day or so of your petition being filed. Some of the big collection agencies (i.e. “debt buyers”) subscribe to this service as well. Theoretically, then, these larger companies should stop contacting you within several days of your bankruptcy filing. Smaller creditors and those who do not have access to this electronic notification service won’t be put on notice until they receive word directly from the court. This can take a little longer, and you may continue to receive bills from these creditors for up to a month or so after initiating your Chapter 7 bankruptcy.
Occasionally you’ll get a creditor that continues its collection practices in spite of the injunction. What then? The first step is to remind them that their conduct is illegal and supply them with the case number of your bankruptcy proceeding so that they may update their records. It is possible they simply never received notice, which can happen if they were inadvertently left off the schedule of creditors in your bankruptcy petition, or if their notification from the court somehow got “lost in the mail.” This is where having an experienced bankruptcy attorney is especially helpful, so you don’t have to try to sort out this mess yourself. Let your lawyer do it for you, that’s what we’re here for.
If the calls persist, your attorney can file a motion against the indefatigable creditor under the Fair Debt Collection Practices Act (FDCPA). Penalties for violating the injunction can include sanctions and attorney’s fees. Rueful is the creditor who persists in its collection efforts despite the protection of the automatic stay.
It is important to note, however, that there are certain exceptions to the automatic stay, meaning that certain entities may legally continue to contact you even after you file for bankruptcy in Will County, Illinois. For instance, you may still be contacted regarding divorce and child support matters (for instance, to establish, modify or enforce alimony or child support payments). Tax proceedings, too, are typically exempt from the automatic stay; the IRS remains allowed to conduct tax audits, issue tax deficiency notices, demand a tax return, issue tax assessments, or demand payment of an assessment. Finally, if you owe money on a qualified pension loan, your income may continue to be withheld to repay the loan.
Eviction proceedings—though typically halted upon commencement of a bankruptcy—may in some cases continue. For instance, if the eviction court had already entered a judgment of possession before you filed your bankruptcy petition, the eviction will generally proceed. Likewise, if your landlord is evicting you for illegal use of controlled substances on the property or for otherwise endangering the property, a bankruptcy filing will not help you.
Finally, be aware that your own actions can cause you to lose the protection of the automatic stay. If you had a bankruptcy case pending within the year before your current case was filed, the automatic stay will not take effect. Similarly, if you fail to meet certain deadlines in your bankruptcy proceeding, the stay will fall off. It is therefore imperative that you contact an experienced Joliet bankruptcy attorney to ensure you fully comply with the provisions of the Bankruptcy Code.
Creditors can also request the bankruptcy court lift (remove) the stay themselves. Under certain circumstances, such requests are often granted. Having a lawyer knowledgeable in the procedures and customs of the bankruptcy courts in Joliet and Will County can mean the difference between using or losing your rights under the U.S. Bankruptcy Code and the FDCPA.
To discuss your individual situation with an experienced Will County bankruptcy attorney, contact Hamilton & Antonsen at 815.729.9220 to set up a complimentary consultation.