Can Creditors Harass You After You File Bankruptcy?
When you file bankruptcy, an automatic stay is put into effect under Section 362 of the Bankruptcy Code. The automatic stay prevents all collection activity while the bankruptcy case is active without an order of the Court. The protection provided by the automatic stay prohibits creditors from contacting the debtor, which allows the debtor to have some breathing room during the bankruptcy process.
Creditors will receive a notice from the Court that the debtor has filed for bankruptcy. However, some creditors ignore the bankruptcy case and continue to call or pursue collection activities. If this occurs, the creditor is in violation of the automatic stay. If a creditor initially violates the automatic stay, then it is likely out of error. Generally, the debtor informs the creditor of the open bankruptcy case, which will stop all further calls. If a creditor continues to call after they have received the notice of bankruptcy filing and after the debtor has informed them of the bankruptcy case, then the debtor should notify their attorney or the bankruptcy court. The bankruptcy court has the power to sanction creditors for violating of the automatic stay, which could result in fines or monetary damages against the creditor.
Under Section 362 of the Bankruptcy Code, the creditor is absolutely prohibited from harassing the debtor after a bankruptcy case has been filed. The automatic stay was put in place upon filing, and creditors who violate the automatic stay could face sever ramifications.