Should You Tell Creditors You Are Filing for Bankruptcy?

Categories: Bankruptcy

Chapter 7 bankruptcy

While you can tell creditors you are filing bankruptcy, doing so may not stop them from continuing to call and try to collect on a past due debt. The only way to stop them from harassing you for payment, legally, is to file for bankruptcy and receive your automatic stay. Also, telling a creditor you intend to file may force them to pursue payment more aggressively – hoping to enforce payment before the automatic stay is granted.

Creditors are notorious for continually calling, emailing, and even texting debtors and asking for payment. When you’re overwhelmed and cannot pay, you may feel you have no options. You know you need to file for bankruptcy, but you haven’t met with an attorney yet. While you intend to file, there is no reason to tell your creditors. Instead, meet with a bankruptcy attorney as soon as possible to get your papers filed. Once filed, you will have your stay, and creditors will stop calling for payment.

Consider What Happens When You Notify Creditors of Your Intentions

Creditors will continue to call even if you tell them you intend to file. However, you may have a goal in mind when telling your creditor your intentions. If that is the case, consider what happens when you do notify them.

Telling Creditors You’re Filing to Make Them Stop Calling

If you are just telling a creditor you’re filing for bankruptcy to cease their calls and collection efforts, there is no guarantee that will work. The only way to stop creditors from asking for payment is to file for bankruptcy and receive your automatic stay.

An automatic stay prohibits creditors from collecting on debts listed in your bankruptcy filing. You will receive an automatic stay immediately after you have filed your bankruptcy papers, and the creditors cannot call, sue, or do any further collection methods until the case is resolved in court.

Creditors know that once you file, they are behind the wall of your automatic stay. Therefore, telling a creditor your intentions to file may make them work harder to collect before you have time to file your papers.

Getting a Creditor to Stop Calling before You File without Telling Them Your Bankruptcy Intentions

To avoid pushing creditors to act more aggressively, the next best way to stop them from calling you while you gather time to meet with an attorney is to write them. You can write to that creditor and in your letter request that they stop contacting you. Doing so does not stop them from continuing collection efforts, however. Therefore, you will not be notified about your account, and the creditor can still file a lawsuit to seek judgment against you for the balance – regardless if you allow them to contact you or not.

Are You Trying to Negotiate Down a Debt? Don’t Threaten with Bankruptcy

If you are trying to negotiate paying a lesser amount than what is owed on the account, do not threaten the creditor with bankruptcy. Instead, you can try to be upfront with your creditor about your income and payment abilities, and sometimes a creditor will work out different payment arrangements to make you current.

Keep in mind, creditors want to get paid, so working out an arrangement to do so is in their best interest.

Once You Have an Attorney, Forward Creditors to Your Attorney Instead

Instead of telling your creditors you intend to file, wait until you have hired a bankruptcy attorney. Then, give your attorney’s information to the creditor. Not only does an attorney’s information show the creditor you are serious and not just saying you plan to file to get them to stop, but they are less likely to harass your attorney for payment. Make it clear that you have hired an attorney to represent you and your debts in bankruptcy court.

Under the Fair Debt Collection Practices Act, that is all you are required to do once contacted by a creditor.

When you file for bankruptcy, your creditors will be notified that you have done so. After they receive that notification, they will cease collection efforts and they may reach out to your attorney or wait for your court hearing. If anyone calls after your automatic stay is in place, take down the company’s name, agent’s name, phone number, and the creditor account information and give it to your attorney. Your attorney will talk with that creditor or take further legal actions if the creditor ignores the automatic stay protections.

Some Parties You Should Notify of Your Intent

While you are not required to call your unsecured creditors, such as your credit card, there are some parties you should notify of your intentions to file. For example, let your landlord know if you intend to file but keep your lease. Also, continue to make your rental payments on time. Your landlord may receive a bankruptcy notification in the mail, so letting them know ahead of time is critical.

While large property management companies already know the process when a tenant files for bankruptcy, a small or private landlord will not. Therefore, notifying them ahead of time, giving them your attorney’s information, and keeping them updated is best.

Ask your attorney for a list of parties you should contact directly to notify them about your intent to file. While you are not required to notify people, your attorney may have a list of creditors that it is best to contact.

Speak with a Bankruptcy Attorney Today

If you need to file for bankruptcy, meet with an attorney from Hames, Anderson, Whitlow & O’Leary. Our team can help you explore your bankruptcy options, and we will file quickly to stop creditor harassment.

During your initial consultation, we can even discuss which creditors you should notify of your intent, if any, and walk you through the bankruptcy process step-by-step.

Get started today by scheduling a consultation with our bankruptcy team. You can also request more information about our bankruptcy legal services online.