There are federal laws limiting the activity of collection professionals. The rules include restrictions on times during which it is inappropriate to call, the right of workers to refuse calls on the job and limitations on how collection professionals speak to individual debtors.
While the law does help curtail the worst kinds of harassment, many creditors and collection agencies can comply with the law while still making people feel miserable on a day-to-day basis. Creditor harassment that does not violate the law could include making multiple calls to an individual each week. If someone does not answer the phone, creditors could call them repeatedly every day.
Many people assume that if the collection activity has not violated federal statutes, then they have few options for changing their circumstances. However, filing for bankruptcy can put a quick end to the stressful collection activity that someone faces.
How personal bankruptcy helps
Someone filing for bankruptcy submits paperwork to the courts. They will need to attend hearings and creditor meetings before they become eligible for a discharge of specific debts. It can be a very lengthy process, particularly if someone pursues a Chapter 13 filing. Thankfully, the filer has immediate protection from collection activity once they submit paperwork to the courts. People receive an automatic stay that will halt collection activity on the same day that they file. The courts will send notice to the credit bureaus, which will likely inform collection agencies and lenders of the pending bankruptcy.
Many filers discover that collection calls and notices stop the same day that they file their initial paperwork. If a company makes a call after someone files, they typically only need to provide verbal notice of their pending bankruptcy case to halt any future communications from that specific company. Organizations do not want to risk the financial consequences possible for violating bankruptcy protections.
If someone completes the bankruptcy process successfully, the discharge of their debts will also help. Creditors cannot resume collection activity after a discharge. In theory, someone may never hear from their creditors again after they initially file their bankruptcy paperwork. Stopping creditor harassment is one of the more common reasons that people decide to pursue a personal bankruptcy filing.