After filing bankruptcy the “automatic stay” comes into effect.  Much like the name implies it happens automatically upon the filing of your case and stays actions against you.

This means that a creditor cannot call you to collect a on a debt as soon as your case is filed. However, it may actually take 2 – 3 weeks for all your creditors to receive notice of the bankruptcy and really stop calling.

During this 2 – 3 weeks period you may answer the phone and tell your creditors about your bankruptcy filing. The creditor will likely ask for your case number and attorney information. Providing this information will cause the creditor to have actual knowledge of your filing and thus they will have to stop calling.

If they still continue to call, call your lawyer, the creditor may be ignoring the stay or they may not have received notice of your case. In either event a strongly worded letter from your attorney is appropriate.

If after a warning letter from your attorney the creditor continues to call, you may be able to bring an action against your creditor for money damages.

Yes settling a debt for less than you owe will save you money but it is not going to save you as much as you think.

When you settle a debt with your credit card or other creditors for less than you owe the amount forgiven is taxable income.

For example if you owe Bank of America $20,000 and they forgive $10,000 the forgiven $10,000 is treated as income to you which you will pay taxes on at year’s end.  The creditor will issue you a 1099.

Also debt settlement for less is reported on your credit report and can negatively impact your credit score.

In bankruptcy debts are discharged through a court order. Discharged debt in bankruptcy will not be taxed or reported as income.

As soon as your bankruptcy case is filed with the Court the “automatic stay” comes into effect. The “automatic stay” is much what it sounds like, it happens automatically upon filing of your case and it stays certain actions against you.

This means as soon as you file bankruptcy your creditors are legally prohibited from, foreclosing on your home, repossessing your car, sending bills, or making collection phone calls.

Of course, your creditors do not know you filed bankruptcy the very instant you file. The Court will send a letter to all the creditors listed in your Creditor Matrix informing them of your filing. This will likely take about two weeks.

If there is an urgent matter, such as a home foreclosure tomorrow, I will call and fax the law office handling the foreclosure to ensure they are aware of your bankruptcy filing and it does not take place.

Bankruptcy can help. As soon as your bankruptcy case is filed the “automatic stay comes into effect. (See 11 U.S.C. §362)

The automatic stay is much like the name implies, it happens automatically by the filing of your case, and it stays actions against you.

Simply put, as soon as you file bankruptcy your creditors are legally prohibited from calling any more.

It is often difficult to keep track of all your creditors. Making matters worse, often times debt collections agents and/or debt buyers make it confusing to understand who you owe.

If, for some reason, a creditor is not included in the initial bankruptcy filing and your bankruptcy case is still open, then worry not the creditor can still be added to your bankruptcy filing. The debt owed to the added creditor must have been incurred prior to filing of your initial documents.

A Motion to Amend your Bankruptcy filing will need to be filed with the Court. Currently the Court will charge a $26 Court filing fee to Amend Schedule D, E, or F.  Here at the Law Office of Robert W. Kovacs, Jr., we will, in most cases, file one Amendment to Schedule D, E, or F without charging additional legal fees.

In all bankruptcy cases there will be a required meeting this is often called the “meeting of the creditors” or the “§341 meeting.” The Case Trustee will conduct the meeting. She represents the interests of all the creditors in the case and is also in charge of administering the debtor’s bankruptcy estate.

All of the Debtor’s creditors are invited to attend the meeting. However, it is very unlikely that a creditor will appear at the meeting in consumer cases. Almost all creditors are satisfied that the Case Trustee will properly examine the Debtor.

In consumer cases the meeting last only 5 – 15 minutes. Typically attendees of the meeting include the Debtor, Debtor’s attorney, and the Case Trustee. During the meeting the Case Trustee will ask the Debtor several questions regarding her financial affairs. The purpose of the examination is to ensure that the Debtor has fairly and honestly represented her assets, income, and debts in the bankruptcy filing.

Typical questions the Case Trustee may ask the Debtor include:

• “Did you review your bankruptcy filing with your lawyer prior to authorizing him to file it?”

• “Have you listed all your assets in your bankruptcy filing?”

• “Could you sue someone for any reason, including a personal injury claim?”

• “Have you given anything worth more than $1,000 to anyone in the last year?”

• “Have you bought or sold any property in the last year worth more than $1,000?”

• “Have you made any one single payment to a creditor of more than $600 in the last 90 days?”

·         “Do you expect to receive any inheritance?”

Currently in Massachusetts the meetings are not held in the Court House. A judge is never present, no one is called to a witness stand, and it is not adversarial in nature. The meetings are an informal and open process.

Debt collectors are well known for using harassing, unethical, and immoral techniques to collect debt. There are both federal and state laws to protect an individual from these abuses.

In Massachusetts creditors, the original creditor, a debt collector agent or attorney for the creditor, are not permitted to call a debtor more than 2 times in a rolling 7 day period at home and no more than 2 times in a rolling 30 day period at a place other than at home.

If creditors are calling keep a detailed log of calls from the creditors. Record such information as: time and date of call, phone number the call came from, name of the creditor and debt collector agent. If you answered the call, who did you speak to, what did they say, how do you call them back?

If the creditor leaves a message on your voice mail, save it, and keep all telephone logs from the phone company.

If you have been sued you may have a counter claim against the creditor because of the harassing phone calls and you may also have a cause of action against them.

Robert