One of the most important aspects of bankruptcy law and a key reason why bankruptcy should usually be considered sooner rather than later is the “automatic stay” that’s created the moment a case is filed. This “stay” means that all efforts by a creditor to collect a debt or to enforce rights against a debtor’s property have to stop immediately. So foreclosures, garnishments, tax offsets, license revocations, arbitration, evictions and any other proceeding to collect a debt must end. Sometimes a secured creditor is able to later get “relief” from the stay but unsecured creditors, like credit card companies or medical providers almost never do. The result is that filing bankruptcy will immediately end a creditor’s right to garnish wages or bank accounts.
Because this “stay” prohibits creditors from continuing debt collection efforts, any violation of the stay can result in actual and punitive damages being awarded to the debtor, plus attorney’s fees. Sometimes there are disputes over whether a creditor received notice of the bankruptcy filing so it’s important for debtors to provide the most recent address for a creditor or debt collector. It’s also better to list the customer service address rather than the address to which payments should be sent. Listing both the creditor and any collection agency to which the debt has been assigned or sold is also a good idea to make sure notice is provided to everyone possible. At Nancy L. Thompson Law Office P.C. we’ve been able to obtain many damage awards for clients who file bankruptcy and then continue to face debt collection from creditors in violation of the automatic stay.