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Stopping creditor harassment with Chapter 13's automatic stay

Wayne County residents struggling with debt are probably all too familiar with debt collectors and the types of practices they use to try to collect. They may not, however, be familiar with the types of limits the law places on what collectors can and cannot do. And Wayne County residents have some legal options of their own that can protect them from debt collectors.

On the one hand, debt collectors do have the right to try contacting borrowers at home, between 8 a.m. and 9 p.m., whether by phone, fax, mail or an in-person visit. They can also contact borrowers' places of employment, but they cannot continue calling if the employer wants the calls to stop. And they can reach out to a borrower's friends and family members for help locating the borrower -- but, importantly, they cannot say they are trying to collect on a debt (or how much a borrower owes).

On the other hand, debt collectors are prohibited from using profanity or threats of violence against borrowers. They cannot present themselves as lawyers or government officials, and they cannot make up other reasons as to why they are calling. They are prohibited from telling anyone else about the debt and under no circumstances can they suggest that a borrower will be arrested for not cooperating with them.

Despite these restrictions, debt collectors do have a lot of leeway to try to come after borrowers. But Wayne County residents seeking to stop creditor harassment have an important legal option: filing for Chapter 13 bankruptcy. When they do, something called an "automatic stay" becomes active, and stops any collection actions from continuing.

Chapter 13 has the added benefit of allowing filers to keep assets like their home, car or business that may be liquidated under a Chapter 7 filing. Under Chapter 13, filers can make manageable payments for a number of years -- usually three to five years -- with any remaining debts generally getting discharged at the end of that period.

The automatic stay under Chapter 13 is a particularly powerful method for anyone looking to stop foreclosure actions, for example. A legal professional can help borrowers get debt collectors off their case and get the fresh financial start they need.

Source: WFMY News 2, "Dealing With Debt Collectors: What You Need To Know," June 25, 2014

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