Will my creditors still come after me if I file for bankruptcy?

Once you file for bankruptcy, you’ll likely see an immediate change in the activity of your creditors.

This is partly because of the “Automatic Stay,” which forbids creditors from contacting a debtor directly (i.e., not through the debtor’s lawyer) once the bankruptcy case has been filed.  And partly because for some creditors it just may not be worth their time and money to pursue the debt.

Here are 5 things that are likely to happen once you submit your bankruptcy petition:

1.  Thanks to the Automatic Stay, creditors must immediately stop all collection activity.  That means no more collection letters or phone calls to you.  Period.  It also means they can’t continue to garnish your wages.  And any lawsuits against you are put on hold and can’t go forward during your bankruptcy case.

2.  That said, some smaller creditors may still contact you because they’re unfamiliar with the bankruptcy laws and the automatic stay.  If you have any problems with them, simply instruct them to contact your bankruptcy lawyer.  (They may not be terribly thrilled with this suggestion, but that’s the way things work in bankruptcy and there’s not anything they or you can do about it once you’ve filed.)

3.  You may never hear again from some creditors, because they’ve weighted the costs and benefits of pursuing their claim and they’ve decided it’s just not worth it.  Perhaps they don’t expect to get anything back in the case.  Or they realize that the amount they would get back is less than the amount they would have to pay a lawyer to represent them.

4.  Other creditors (those with more at stake) will file what’s known as a “proof of claim” in the case.  This is each creditor’s way of trying to get as big a piece of the asset pie as possible.  Since the pie is limited to your non-exempt assets, the proof of claim is more about creditors competing with other creditors for their share of the pie.

5.  Your bankruptcy lawyer (if he/she is a good and experienced one) will keep you up to date on the parts of the case that you need to know about and where action is required by you.  Your bankruptcy lawyer should also patiently answer all of your questions to your satisfaction.

For a free consultation, contact Haines and Krieger at 702-880-5554.

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