When you are in over your head in debt, filing for bankruptcy is an effective way to stop harassment from a collection agency or even from many collection agencies. However, depending on the type of harassment you are being subjected to, you might be able to stop the harassment without filing bankruptcy. There is a federal law called the Fair Debt Collection Practices Act (FDCPA) which protects consumers from harassment, oppression and abuse in order to collect on a debt. According to Section 806 of the FDCPA, debt collectors may not:
- threaten or resort to violence
- physically harm you or your property
- threaten to harm your reputation
- use obscenities or profanity when speaking to you
- tell you they are going to sell your debt to a third party in order to get you to pay your debt
- publish your name on a list of consumers who are unable to pay their debts (they are allowed to report your lack of payment to consumer credit reporting agencies)
- call you before 8am and after 9pm (your time zone)
- Repeatedly call you "with the intent to annoy, abuse, or harass"
If any of these things are happening to you, and you don't want to file bankruptcy consider calling an attorney to discuss your options to stop the harassment under the Fair Debt Collection Practices Act.
How Bankruptcy Can Help
The basic goal of our federal bankruptcy laws is to give Americans a "fresh start" from their "burdensome debts." This is done through a process called a discharge, which is a court order that removes your obligation to repay most (sometimes all) of your debt.
There are two types of personal bankruptcy that are most often used in the US:
- Chapter 7 is sometimes called the straight or liquidation bankruptcy. This is more popular for people with high debt and few assets, as most assets are sold to pay creditors.
- Chapter 13 is known as the reorganization bankruptcy because you will come up with a court approved plan to repay much of your debt over a 3-5 year period. This is a better choice for someone with assets, like a house that they want to keep.
After each type of bankruptcy is completed, the remaining debt is discharged, or forgiven. Some debts cannot be forgiven in either type of bankruptcy, so you will want to consult with an attorney to learn how local laws affect your situation. The type of debt that survives a bankruptcy includes taxes, child support, court ordered fines and fees for previous criminal convictions, and some types of student loan debt.
Stop The Harassment
As soon as you file for bankruptcy, your creditors are notified (make sure you list all of them) and by law they have to stop contacting you by telephone and mail. The only person they are allowed to contact is your attorney. In fact, during the bankruptcy the only contact you may have with them is once at a meeting called a "341 meeting" which your creditors may choose to attend to question you about your debt and current resources.
Get Legal Help
Financial distress can be overwhelming and embarrassing; but you are not alone. Unfortunately more and more Americans are finding the need to protect themselves from sky high debt with bankruptcy protection. There are many competent, experienced lawyers who are available to help you choose which type of bankruptcy is the most appropriate for you and who can file for you and represent you. Don't wait. There really is a fresh start available to you.
