Most people who ultimately file for bankruptcy, first spend a lot of time trying to find another way. A person will cut out unnecessary expenses, review and re-review income and debt, and finally come to the conclusion that there is no way to get back on top and current on all bills. Usually, by this time creditors and collection agencies have relentlessly hounded the person with telephone calls and letters.
When a person owes money or a debt to another that person owing the debt is called the debtor. The person to whom the debt is owed is called the creditor.
Contact from creditors and collection agencies can be embarrassing to debtors. There are laws in place to prevent creditors from using unethical embarrassment tactics. However, the person owing the debt may nonetheless feel embarrassed. Certainly, these calls can be annoying. They can be threatening. There are laws in place that prevent creditors from threatening to take actions that they are not permitted to take. These laws don’t prevent creditors from threatening to take legal action, and will therefore often feel very threatening nonetheless.
The Filing of Bankruptcy Creates a Temporary Prohibition on Many Debt Collection Efforts
When filing for bankruptcy, you must list all of your current creditors. Either you or your attorney will do this in a document called a creditor matrix. A creditor matrix is a list of the names and current addresses of all creditors and other parties that should have notice of a bankruptcy. It is prepared by a debtor and must be filed at the same time the bankruptcy petition is filed.
When you file for bankruptcy, your creditors will be prohibited from taking certain actions against you. Creditors are informed that they are prohibited from taking certain actions against you by the Clerk’s Office after you file your creditor matrix. The Clerk’s Office will notify your creditors by mail that there is an “automatic stay” in your case.
An automatic stay is basically a hold placed on most debt collection against you. By listing your creditors in your bankruptcy filing documents, the Clerk’s Office knows which creditors to contact and inform of the automatic stay.
As a debtor, it is your responsibility to ensure you have listed current, valid addresses for your creditors. If mail sent by you or the Clerk’s Office regarding your bankruptcy comes back as “undeliverable,” it is your responsibility to try to find a good address for the creditor and notify the Clerk’s Office of the good address.
Additionally, if you obtain a different address for a creditor after you file your bankruptcy, you must notify the Clerk’s Office in writing of the new address.