Filing for bankruptcy is seemingly the best solution for anyone facing financial difficulties and unable to repay his/her debts. However, bankruptcy has a share of its disadvantages, which should be weighed against the advantages while making the final decision. The main problem you may encounter after filing for bankruptcy is constant harassment by your creditors. While the court can decide what will happen to most of your debts, it may not be able to stop harassment from the people you owe. At the San Diego Bankruptcy Attorney, we will not only help you through bankruptcy processes but also ensure your safety from such harassment. Contact us for help if your creditors are still calling and harassing you after filing for bankruptcy.
The Basics of California Bankruptcy
Many people are dealing with an overload of debts that are hard to repay. The two leading solutions for such people are either debt settlement or filing for liquidation. Each of these strategies is good to a certain extent, and they pose certain disadvantages that you must be aware of before settling for either of them. The main advantage of each of them is their ability to help a debtor manage their debts.
Debt settlement is always the best solution when compared to filing for bankruptcy. It involves repaying all your debts in one lump sum, following an agreement with your creditors. If you have some money and you can negotiate on a lump sum payment with your creditor, you will be out of debt in no time. However, not many people/companies are willing to accept a lesser amount than what their debtors originally owe them. For that reason, debt settlement may not work in most situations, especially if you owe so much money in debts. However, some individuals or companies are willing to receive small amounts of money over a specified period until their debtors clear their debts.
If debt settlement is not working for you, maybe because you are not able to raise money to keep up with the payments, the only option available will be filing for insolvency. Filing for liquidation is also ideal for a person who owes so much and is unable to make enough money to pay up their debts. California bankruptcy laws allow any person that is overwhelmed with debts to file for bankruptcy to manage their debts and move on with their lives. The problem with this strategy is that a bankruptcy report will appear on your credit report and may affect your ability to acquire credit in the future.
The most common type of bankruptcy in California is Chapter 7 Bankruptcy. It is mainly filed by individuals and small-scale business people who are unable to make payments for their bills. This kind of bankruptcy is also called liquidation bankruptcy because it involves the selling of your assets to generate enough money to settle debts. The advantage here is that you can keep your creditors off your trail for life if all your debts are cleared in the end. However, you may suffer a poor credit rating, and may not be able to get credit in the future.
Filing for bankruptcy is, however, not a sure way to eliminate all your debts. If your debts are more than what can be recovered from your disposable assets, your bankruptcy process will involve two obligations. These are dischargeable and non-dischargeable liabilities. The former are the kinds of debts that can be eliminated through the bankruptcy process. The non-dischargeable debts are those that you have to pay for, even after you have been declared bankrupt. The court may be able to protect you from harassment for dischargeable debts but not non-dischargeable obligations.
Understanding Creditor’s Rights in Bankruptcy
When a person is in financial distress, the only thing that comes to their mind is how they can get out of that situation. Debtors want to save their situation, and in most cases, at the expense of the creditors. During debt discharge, your creditor should waive their rights to what you owe them, regardless of the amount and how long you have been in debt. However, it helps to know that creditors have rights, even as you file for bankruptcy. The bankruptcy court will consider them in the final decision they make to ensure that their rights are not violated. Here are some of the creditors' rights.
Rights to Take Part in the Distribution of the Bankruptcy Estate
This is one way in which your creditors will recover their money. If you have been granted a Bankruptcy Chapter, most of your assets will be sold out to raise funds for your debt repayment. You should provide a list of all your creditors and the amount of money you owe each of them. Your bankruptcy trustee will then come up with a priority list, which will be used to dispense the payments. Your creditors have the right to take part in this process, to ensure that at least all their debts have been repaid.
Rights to be heard by the Bankruptcy Court Regarding the Debtor’s Plan
If you have filed for Chapter 13 bankruptcy, you will be helped to come up with a repayment plan for all your debts. Your creditors have a right to know what your plan is, and whether or not they have been included in the plan. If your creditors feel that the plan will not work in their favor, they have a right to be heard by the court and the adjustments made accordingly.
Rights to Challenge Your Rights to Debt Discharge
Debt discharge is the only way a debtor can forget about some of his/her debts and only concentrate on repaying the pothers. However, your creditors have a right to agree to the discharge. The court cannot grant you debt discharge if it is not for the best interest of your creditor. If a particular creditor does not want their debt to be discharged, they can contest it in court.
It is essential to know that the court will not violate the rights of creditors when accepting your bankruptcy petition. It is, therefore, desirable to try and work things out with your creditors before making the final decision. Ensure that you have listed down all your debts, to avoid any likelihood that your petition will not be granted.
However, doing everything the right way does not guarantee that your debtors will let it pass after you have successfully filed for bankruptcy. There is always a chance that a creditor will call you or send debt collectors your way, to make you clear your debts. That is why you need to maintain a qualified bankruptcy attorney for the protection of your rights.
Dealing With Creditor Harassment after Bankruptcy
Filing for bankruptcy is a form of protection for debtors as it immediately ceases the creditors’ efforts to collect their debts. Debt collection is not an easy thing to deal with, especially if you owe so much money but have no way of paying it. The problem is that even after a successful bankruptcy process, some creditors will continue to harass their debtors, demanding payment. It can be frustrating, mainly, if you already know that you are under the court's protection and should not be harassed. The good thing is that there are many ways through which you can protect yourself against such harassment in California. Here are some of these ways.
After filing for a California bankruptcy, you will automatically get a potent tool that can protect you against creditors' harassment, which is the automatic stay. It is usually a court injunction that prohibits any creditor from taking action against their debtors while the bankruptcy process is ongoing. With that injunction in place, creditors are not permitted to do the following:
Call their debtors
Send them texts, emails, or letters
Repossess their credit security
Foreclose on their home
File or even continue a litigation
Place alien on their assets
Other similar activities geared towards debt recovery
Most creditors understand this and will automatically stop contacting their debtors as soon as they are informed about the bankruptcy. Some creditors will also contact you because they have not received a notice that you have filed for bankruptcy. However, some will still call or send debt collectors to your home or office even after receiving the notification. Since this is against the law, you may need the help of a bankruptcy attorney to ensure that they understand why they need to end harassing you. Do not sit back and assume that they will stop.
Note that once the process has started, a creditor will need approval from the court to contact their debtor in any way. If not, your lawyer will file a legal suit against them for breaking the law and ignoring the automatic stay.
The Bankruptcy Discharge Injunction
Once the court grants your discharge petition, your automatic stay will be changed into a discharge order. What this means is that the individual/company whose debts have been discharged will no longer be allowed to take any action against you. However, there are ways through which the creditor may continue getting in touch with you as an attempt to collect their debt. These are the things that your creditor might do in trying to recover their discharged debts after you file for bankruptcy:
Your creditor may pressure you into acquiring another credit to substitute the older one
He/she may incorporate the old debts into new obligation, for example, by refinancing your car loan
Attempts to recover debts you may have verbally arranged to pay
Making demands either through calling or writing
He/she may decide to indicate their debt as discharged in your credit history only if you pay
Repossessing, or foreclosing a property
Filing a legal suit against you
Sending you a notice of action on the discharged debts
To be on the safe side, maintain a skilled bankruptcy attorney. He/she will advise you on the steps to take as well as take any legal action for any violation by your creditor.
Understanding the Difference between Dismissed and Discharged Debts
Note that a bankruptcy court can only discharge some and not all your debts. Once some of your debts have been removed, your creditor will be violating the law if they try to recover those debts. However, you need to know if a particular debt was indeed discharged or dismissed to understand whether or not your creditor is right in harassing you. If the debt were only repudiated, your creditor would be legally justified to get in touch with you over its repayment. By getting in touch with you, he/she will not be violating the discharge injunction.
Most bankruptcy cases in California end with some debts getting dismissed and others discharged. The intended result is typically the discharge, as it relieves the debtor their liability to pay back the debt. Some of the debts that can be discharged in California include personal loans, credit card debts, home, and car loans. However, some cases do not end with discharge, and so, the debts get dismissed.
There are several reasons why some debts get dismissed instead of discharged. If, for instance, the debtor did not complete all their official paperwork, or they failed to provide their tax returns to their bankruptcy trustee, the bankruptcy court might dismiss their appeal to have their debts discharged. Other reasons include failing to attend the Section 341 meetings with creditors and refusing to cooperate with the bankruptcy trustees. Once the discharge request is dismissed, your debtor will have every right to get in touch with you in any way, to recover their debts.
In addition to this, there are non-dischargeable debts, which cannot be discharged in any bankruptcy case. Some debts are automatically non-dischargeable, and some will not survive if the debtor was to petition the court for discharge. It is advisable to know which debts have been discharged and which ones have not, to be prepared in the events your creditors start calling for repayment. In the case of non-dischargeable obligations, be prepared to repay them even after a successful bankruptcy process.
Some of the debts that are automatically non-dischargeable in the California bankruptcy case include:
Income taxes alimony and child support that is long overdue
Debts incurred due to a DUI-related offense
Restitution and court fines incurred through a criminal case
As mentioned above, the court might not issue a discharge order if the creditor does not agree to the discharge. Some of these debts include:
Debts incurred through malicious and willful acts
Credit card debts incurred from cash advances in the acquisition of luxurious products or services
Debts incurred due to breach of duty larceny and embezzlement
Debts the debtor has failed to list on their bankruptcy paperwork
If a creditor is harassing you after filing for bankruptcy, it is advisable to get in touch with an experienced bankruptcy attorney. Your advocate will be able to determine whether or not the debt has been discharged, and the course of action to take afterward. If the debt was discharged, you might be able to file a legal suit against your creditor. If not, your advocate will get in touch with your creditor to determine the way forward. If your creditors do not stop harassing you for repayment of discharged debts, the court may be compelled to reopen the bankruptcy case to sanction the creditor for that violation. You will also be allowed to file a suit against the creditor for compensation for any suffering you may have incurred as a result of their activities.
Can I be Sued After Filing for Bankruptcy?
Creditors will go to any extent to ensure that their debtors do not get away with their debts. Other than making calls, sending messages, or sending debt collectors to their debtors, some creditors can go to the extent of filing a legal suit against their debtors. This will work if they have exhausted all other avenues to collect their money. However, it may not work if the debtor has already filed for bankruptcy.
Determining the course of action to take will depend on the reason why your creditor has decided to file a legal suit against you. Some creditors will file a lawsuit without knowing about the bankruptcy case. In that case, your lawyer will notify them of the situation and ensure that they stop their debt collection. Others do not understand the Automatic Stay, which can be explained by your attorney.
If the creditor does not drop the lawsuit, you must comply with the court’s procedure, which is to respond to the complaint. Again, the help of an experienced bankruptcy attorney will be invaluable in this case.
Find a San Diego Bankruptcy Attorney Near Me
California bankruptcy laws are not as apparent as one would expect. That is why working with a bankruptcy attorney is always an excellent idea. At the San Diego Bankruptcy Attorney, we have a team of experienced attorneys who are willing to take you through any legal process involving bankruptcy. If you want to put an end to creditor harassment, call us at 619-488-6168.