Many clients and prospective clients contact us and ask common questions based on advice from their relatives or a “friend of a friend.” These blog entries will dispel common myths and educate you on the general process of bankruptcy in Florida.
QUESTION: Does Bankruptcy Cease Collection Activity of Creditors?
One of the main benefits of consumer bankruptcy is that upon filing pursuant to Bankruptcy Code Section 362, the Automatic Stay goes into effect which prohibits further creditor collection action without court approval. In a nutshell, filing bankruptcy will stop a foreclosure sale; cease wage garnishment, stop creditor calls, end threatening letters, and repossession of automobiles. However, if you have filed bankruptcy multiple times within one year, the Automatic Stay may not go into effect without court approval.
Further, Bankruptcy Courts will sanction and award damages against collection agencies and creditors who violate the Automatic Stay. Most common is that collection agencies continue calling Debtors in Bankruptcy. It is important to keep a log of any post filing calls as you may be entitled to damages against these violating creditors.
For more information, please contact the experienced bankruptcy attorneys at The Wallace Law Group with convenient office locations in Boynton Beach, Sunrise, Aventura and Downtown Miami.