How Do I Stop Creditor Harassment and Demands?

Can I Stop Wage Garnishment, Foreclosure, Repossession?

Can I Stop the IRS or Other State Tax Agencies?

The filing of a petition in bankruptcy generates a restraining order protecting the debtor from creditors.  This injunction is referred to as the "automatic stay," and broadly prohibits any form of effort to collect money or property from the debtor.

Creditor harassment and demands generally may continue until the moment the automatic stay is in effect.  Other protections are available under federal law regarding conduct of "collection agencies."  See, Fair Debt Collection Practices Act.  Once a creditor has notice of the automatic stay, continued efforts to collect money or property may be considered willful and intentionally, and may subject the offending creditor to punitive damages and attorney fees incurred by the debtor.  See, 11 U.S.C. § 362(h)

Wage garnishment, foreclosure, and repossession are all efforts to collect money or obtain possession of property of the bankruptcy estate, and are therefore prohibited by the automatic stay.  A creditor must obtain permission from the bankruptcy court to take possession of property, such as collateral (for example, a home or vehicle).  Any garnishment of wages which is pending at the time of filing of the petition must be released.  Any property obtained from the debtor after the filing of the petition, and without permission of the court, must be returned.

Tax agencies such as the Internal Revenue Service or a state tax agency are subject to the same restraints as ordinary creditors.  The filing of the petition prevents a tax agency from filing and/or enforcing liens, levying on bank accounts or wages, or seizing refunds due to the debtor.  Additionally, the Internal Revenue Service is subject to the Fair Tax Collection Practices under the Internal Revenue Code.

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