Persistent Debt Pursuit After Bankruptcy: Understanding the Reasons and Solutions
Filing for bankruptcy is a legal process that offers individuals and businesses overwhelmed by debt a fresh start. It provides relief from creditor harassment and protects debtors from aggressive collection actions. However, there may be instances where individuals find themselves still being pursued for a debt even after filing for bankruptcy. In this article, we will explore the reasons behind such occurrences and shed light on what individuals should know in such situations.
Automatic Stay
When an individual files for bankruptcy, an automatic stay goes into effect immediately. This stay halts most collection actions against the debtor, providing them with temporary relief. This means that creditors are legally required to cease all attempts to collect the debt, including phone calls, letters, lawsuits, wage garnishments, and repossessions.
Exceptions to the Automatic Stay
While the automatic stay offers substantial protection, it is not without exceptions. Certain types of debts are exempt from the automatic stay and may still be pursued even after bankruptcy filing. These exceptions typically include child support and alimony obligations, certain tax debts, criminal fines, and certain types of loans secured by collateral.
Debts Discharged vs. Non-Dischargeable Debts
Bankruptcy allows for the discharge of eligible debts, meaning they are wiped out and the debtor is no longer legally obligated to repay them. However, not all debts can be discharged. Non-dischargeable debts, such as student loans (in most cases), recent taxes, and debts resulting from fraud or willful misconduct, will persist even after bankruptcy.
Debts Inadvertently Missed in Bankruptcy Filing
Sometimes, a debt that should have been included in the bankruptcy filing may have been inadvertently missed. It can happen due to oversight or lack of awareness about the debt’s existence. In such cases, it is important to consult with the bankruptcy attorney and address the matter promptly.
Violations by Creditors
Occasionally, some creditors may violate the automatic stay and continue to pursue the debt despite knowing about the bankruptcy filing. This is a serious breach of the law and can lead to penalties for the creditor. It is crucial for debtors to document such instances and report them to their bankruptcy attorney for appropriate action.
Chapter 13 Repayment Plans
In Chapter 13 bankruptcy, a debtor proposes a repayment plan to repay some or all of their debts over a three to five-year period. If a debtor falls behind on their agreed-upon repayment plan, creditors may be permitted to resume collection actions. It is essential for debtors to adhere to the repayment plan diligently to avoid any complications.
Seeking Legal Assistance
If you find yourself being pursued for a debt after filing for bankruptcy, it is imperative to seek legal assistance immediately. Consult your bankruptcy attorney to review the circumstances and ensure that your rights are protected. They can guide you through the necessary steps to address the issue and ensure compliance with the bankruptcy laws.
Conclusion
While filing for bankruptcy provides a fresh start for individuals overwhelmed by debt, there can be instances where debtors find themselves pursued for debts even after filing. Understanding the nuances of the bankruptcy process, the exceptions to the automatic stay, and the dischargeability of debts is essential. Seeking professional legal guidance is crucial to address any post-bankruptcy debt-related issues and ensure the protection of your rights as a debtor.
Video Transcript
What Can You Do if You Are Being Pursued for a Debt After Filing Bankruptcy?
So here is the scenario. You have a debt, you file bankruptcy, then the creditor who you had a debt with, pursues you and sues you. What are your options? You might think, wait, I filed for bankruptcy. They can’t sue me. That is probably true, at least in many jurisdictions. That is true. It is especially true if they were listed as a debt to be discharged in the bankruptcy, but even if they weren’t in many jurisdictions that debt is still discharged, but you are getting sued for it.
So What Do You Do Now?
Well, quite simply, you have two options. You can either bring this to the attention of the judge in the lawsuit where you just got sued by filing a motion or, and this is the more powerful option. You can file a motion in bankruptcy court where your bankruptcy was heard. Those are your two options.
Conclusion
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