Will Your Creditors Stop Calling You? Automatic Stay in Bankruptcy

Actually, you don't even need to file for bankruptcy to prevent creditors from calling you. All you have to do is inform them in writing that you don't want them to call you. All they can do after that is to send you a final demand letter before filing a lawsuit against you.

Nevertheless, once you do file for Chapter 7 bankruptcy, your creditors, secured and unsecured, are automatically precluded from trying to collect what you owe them. It's called "automatic" stay because court issues this injuction on its own initiative without you even asking for it. This is to give you some peace of mind and to ensure that the bankruptcy trustee, and not your creditors, will decide what you get to keep. Even non-dischargeable loans are subject to the automatic stay.

When the stay applies

Credit card, medical debts, attorney's fees. Creditors cannot file a lawsuit against you or proceed with the old one.

Utility disconnections. Utility companies may not cut off your service for 20 days after you file.

Overpayment of public benefits. Government cannot reduce your current payments to make up for what you owe them.

IRS liens.

Foreclosures are initially stayed but will be lifted if you've already filed for bankruptcy within the last two years and the court allowed the lender to proceed in that previous case. This is done to prevent people from filing for bankruptcy just to prevent foreclosures. However, the court will likely lift the stay if the foreclosure will ultimately occur. If keeping your home is a priority, Chapter 13 bankruptcy might be a better option.

When the stay does not apply

Certain types of collection actions against you are not prohibited by the automatic stay:

- Tax proceedings, such as IRS tax audits or demands for payment.

- Most divorce and child support proceedings.

- Pension loans.

- You had a prior bankruptcy case pending within a year before filing. In this case, automatic stay will be effective for 30 days only in the present case.

- You've missed the deadlines for dealing with secured debts (where some of your property is a collateral in case you don't pay).

- Evictions, if the landlord already got a judgment against you before you filed for Chapter 7 bankruptcy or the landlord claims you've endangered the property or used controlled substances on the property. Otherwise, automatic stay does apply but the landlord is likely to eventually prevail on a motion to lift it and evict you.

To find out more about the bankruptcy process, please contact San Diego business and employment attorney Sergei Tokmakov. Call now (858) 205-5665 for a free consultation or free bankruptcy articles.

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Negotiating With Creditors

Negotiating with creditors is not an easy task. They are notorious for being unscrupulous when it comes to collecting what is owed to them. Creditors may be pushy, intimidating or downright rude in their attempt to collect their payments. While it's important to honor your financial and legal obligations, it's just as important to protect your own interests in the process.

Considering debt can limit your financial stability, drain your bank account and make it impossible to obtain new credit, understanding what you need to do to negotiate with creditors and how the process works can make the negotiations much more bearable. Negotiating with creditors can allow you to pay off debt in a reasonable amount of time under a sustainable plan and can even allow you to negotiate lower interest rates on what you owe. Debts that can be negotiated include:

Personal loansStore cardsMedical billsBounced checksStudent loansCredit cards (unsecured)

Steps for Negotiations

First and foremost, your ability to negotiate with creditors depends on how much leverage you have with which to negotiate. Usually a creditor is open to negotiate the payment of debts to some extent because they want at least some, if not all, the money owed to them. The following steps will help ensure a pleasurable outcome during negotiations.

Before you begin negotiations, you will need attainable expectations. Set clear goals with your attorney. They will help you understand what the likely outcome will be in your particular situation.
Be able to clearly explain what you plan to do to fix the problem and how you will do it. Creditors will be more likely to accept your offer if you take the initiative to solve the issues prior to the negotiation meeting.
In order to be more knowledgeable and prepared, take the time to brief yourself on the facts involved in the negotiating process. Make sure your attorney is involved during this step.
To avoid mistakes or potentially forgetting information, have your attorney write down all the questions and thoughts you have regarding the dispute.
Understand the offer clearly and read through a description of the details to prevent miscommunication before signing or agreeing to anything.
Even if the creditors become rude or misleading, always be courteous and polite during this stage of communication.
The goal at the end of negotiations is to reach a mutual decision. Don't agree to anything you can't reasonably do. Once a solution has been agreed upon, you must keep to your part of the bargain.

The process will ultimately depend on how far the creditors are willing to negotiate. Always remember, however, that regardless of how long negotiations last, that you have rights under the Federal Fair Debt Collection Practices Act that protect you from abuse or unfair collection practices. Contact the Federal Trade Commission if you believe that a creditor has violated the law in its dealings with you. Your attorney will also be available to help ensure fair and just collection practices during negotiations.

This article was written by Roger Brent Hatcher, an attorney at Smith, Gilliam, Williams & Miles, a leading  Atlanta Law Firm  since 1928.

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