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Does bankruptcy really stop bill collectors?

On Behalf of | Jun 15, 2018 | Firm News, What Bankruptcy Can Do |

If you are not familiar with bankruptcy, there are probably many small frustrations associated with the process that you do not know about. For example, you may not realize the extent to which Tennessee courts deliberate on their decisions, slowing down the relief of debts.

However, it is not usually the lack of speed that frustrates most people who declare bankruptcy. This is because, in some situations, this arduous process represents a welcome change in a debtor’s daily life: silence from persistent collection agencies.

According to the Consumer Financial Protection Bureau, the law would require debt collectors to stop calling you if you have a decision pending in bankruptcy court. More specifically, any action related to a debt you listed in your filing would be dealt with through the workings of the legal system rather than with a personal negotiation between you and your lenders.

This does not mean that bill collectors would necessarily stop calling you altogether. However, you could notify them that the debt in question was in court. Receiving this information typically gives the lending party certain responsibilities, so it often makes sense to keep a record of any such communication you make.

You may have noticed that this discussion has only applied so far to the events during a bankruptcy process. If you were to discharge debts with bankruptcy, the same rules on collection would apply: lenders would not be able to approach you to collect their money. There is one important caveat, and that is that some property you own could be viewed as collateral for a debt, allowing the lending agency to repossess it. However, this might not apply to every bankruptcy, so please do not view this article as legal advice. It is only meant to educate you.