The decision to file for bankruptcy is not easy, but for many people it’s the best way to get a handle on their finances. Filing for bankruptcy also grants filers an automatic stay against creditor attempts at recovering the debt. If creditors attempt to recoup a debt while an automatic stay is in place they could be subject to legal reprisal depending on the circumstances.
Most automatic stays go into effect immediately after bankruptcy is filed. How long the order is in place usually depends on the description of the debt being discharged. When action is taken against the debtor, the automatic stay is usually in place until the discharge order is official. At this point, creditors can resume attempts to recover the debt, but only for the items that were not discharged. This includes things like taxes owed or student loan debt. When action is in pursuit of collateral property, filers must make a statement of intent to redeem the collateral or reaffirm the debt within 31 days, or creditors are allowed to take action against them.
The automatic stay may be revoked when a person is considered a serial filer. There is no standard definition of a serial filer, but courts typically focus on individuals who appear to be abusing bankruptcy court. In this case, the automatic stay may be lifted while the bankruptcy proceedings are ongoing or it might be delayed to allow creditors further attempts.
Any unlawful attempts by creditors during the automatic stay period should be addressed to the court immediately. Actions can be taken to stop the unlawful contact, but filers can also sue for injuries in case the contact had greater consequences. Damages sought can be compensatory or punitive depending on the creditor’s actions.