One of the major reasons for filing for Bankruptcy relief is the application of what's known as the "automatic stay." Section 362 of the Bankruptcy code mandates that creditors must cease all collection activities upon the filing of a petition in bankruptcy. This includes all calls, letters, repossession efforts, and foreclosures. This doesn't mean that your creditors will be prevented from pursuing a repossession or foreclosure forever, but it may give you some time to work out an alternative, or a renegotiation with your mortgage holder.
What is important to remember is that even before you file bankruptcy, there are limits to what creditors can do to attempt to
collect a debt. In Texas, the Texas Debt Collection Act and the Federal Debt Collection Act may apply to offer the consumer protections from creditors. Under either statute, a debt collector may NOT use:
- Threats or Coercion (including threats of imprisonment)
- Harrassing Phone Calls (includes using profane language, not disclosing the caller, causing person to incur long distance charges, making repeated calls),
- Unfair or Unconscionable Conduct
- Fraudulent, Deceptive, or Misleading Representations.
Creditors are relentless in their collection efforts. One of my clients was even chased down the highway for over 30 minutes by a tow-truck driver attempting to repossess here car. Clearly, this is harrassing and coercive, not to mention unsafe. There are clear remedies for violations of these consumer laws including recover in tort, which allows for actual damages and up to 3x your economic damages is brought under the Deceptive Trade Practices Act. If you are being harrassed by creditors, you may have a claim for relief. Contact an attorney in your area to discuss your options and find a solution to your financial hardship.