My bankruptcy clients in Colorado frequently call me after the filing of the petition to inform me of continued creditor harassment. The debts pursued typically are for old credit card debts and past due medical bills, and the aggressor is usually a third party collection agency. Such over aggressive creditor behavior is inconsistent with the notion that bankruptcy debtors are entitled to a “fresh start” once they file for bankruptcy.
Due to the automatic stay provisions, what should happen after bankruptcy is filed is that all creditor collection activity should stop. This means that creditors cannot continue to garnish wages, seize any bank accounts, is stopped from foreclosing on a home or repossessing a vehicle, or call you or your employer to collect any type of debt. (Secured creditors are required to file a Motion for Relief from Automatic Stay in the Colorado Bankruptcy Court in order to request court permission to eventually re-obtain the underlying collateral.) My opinion is that most creditors who violate the automatic stay do so knowingly with the hope that the debtor will (in looking to avoid further harassment) simply pay the debt in issue without informing their lawyer.
Further, it’s no defense for a creditor to claim that it did not intend to violate the bankruptcy automatic stay provisions if the creditor knew about the filing, particularly when the case was filed. Even if the creditor “had reason to know” about the bankruptcy filing, actual knowledge can be imputed if, from the overall circumstances, any reasonable creditor should have known about the bankruptcy.
I always inform my bankruptcy clients in Colorado that I can turn around and sue any overreaching creditors for knowingly violation of the automatic stay, with the primary remedies being contempt of court and money damages for my client. And, on numerous occasions, with a simple phone call, I’ve forced creditors to turnover any wages garnished after the filing of the petition.