When you owe more to your creditors than you are able to pay off quickly and easily, the companies that own your credit card or medical debt will likely start calling you to try to collect. Collection activity can become so stressful and intimidating that you don’t even want to answer your phone anymore.
However, you don’t have to live your life in fear of who is on the other end of that incoming phone call. If your debt is truly past the point where you can manage the payments, it may be time to consider whether bankruptcy is a viable option.
Unlike other debt relief options, bankruptcy reduces your overall debt by offering a discharge of unsecured financial obligations such as credit card debt. In addition to the potential for debt forgiveness, you receive protection from aggressive collection activity as soon as you file your initial request.
Those seeking a bankruptcy benefit from an automatic stay
If your creditors want to take action against you, making the first move could protect you from potential future lawsuits or other more drastic efforts to force you to pay as soon as possible. Any debt that may be subject to discharge in a bankruptcy is also subject to the automatic stay issued when the courts accept your initial bankruptcy filing.
In the months between when you file your request and receive your discharge, creditors have to leave you alone. They can no longer send you letters, pursue a pending lawsuit or call you at home or work as part of a collection effort. You receive protections from all forms of collection activity until the courts resolve your bankruptcy filing.
What to do if a creditor does call
Many people simply stop answering their phones or accepting calls when creditors start harassing them. However, once you file for bankruptcy, you don’t need to avoid those calls anymore. In fact, answering them may help you put a faster end to them.
The company may not have been among those that you listed in your initial filing or may not have processed the notification of your pending bankruptcy. By answering the call and confirming that you have filed for bankruptcy protections, you will prompt them to update their records to reflect the fact that they should no longer call you. Additionally, if you overlook that debt during your initial filing, you can use that call as a reminder to amend your bankruptcy petition to include the debt.
Both Chapter 7 and Chapter 13 bankruptcy offer an automatic stay. For those struggling with debt, the benefits of bankruptcy often outweigh the risks. Educating yourself more about bankruptcy, such as your ability to protect certain assets during bankruptcy, can help you make better decisions about managing your debt.