In most cases, Texas consumers who file for bankruptcy receive immediate protection from creditors trying to collect debts. Usually, courts issue an automatic stay when a bankruptcy case is filed. This court order prevents collection actions while the bankruptcy case is in progress. Bankruptcy law holds creditors accountable if they willfully violate the stay.
During the first one or two weeks after filing a case, creditors might continue to contact debtors simply by mistake. These communications generally represent innocent errors by entities that were not aware of the bankruptcy filing. A week might pass before court notices reach creditors in the mail. When debtors receive calls from creditors during this early phase of the bankruptcy, they should provide their court case numbers and inform them about the automatic stay. People also have the right to inform creditors directly as soon as they receive their automatic stays. This move could be especially important when repossession or foreclosure threatens someone's property.
Although most creditors understand that they cannot pursue collection while a stay is in force, some still try to collect money or property in willful defiance of the order. A repossession that occurs during an automatic stay could result in a court ordering the return of property and the payment of other damages.
A person who has legal representation might be able to counteract these unlawful attempts at collections. An attorney could contact the creditors and remind them of their legal obligations or alert a court to take action against any parties in violation of the stay. A person might also benefit from legal support during a bankruptcy because an attorney could prepare the financial disclosures necessary for the court. Familiarity with the process could limit the possibility of making paperwork mistakes that might interfere with the discharge of debts.