What Do Creditors Do When They Find Out My Bankruptcy Has Been Dismissed?
When you file a bankruptcy petition, your goal is a discharge, which is the elimination of your debts. However, if your case is dismissed, it means that your case has been thrown out of court and you have received no relief from your debts. In the case of a dismissal, your creditors are free to pursue any and all legal means to compel you to pay.
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Automatic Stay
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As soon as you file a bankruptcy petition with the court, you are granted the benefit of the automatic stay. The automatic stay is a provision of the bankruptcy process that prevents creditors from pursuing you in any manner for the repayment of outstanding debt. If you successfully obtain a bankruptcy discharge, the effects of the stay become permanent, and you are protected by court order from your creditors ever pursuing you for those debts. However, in the case of a bankruptcy dismissal the automatic stay is similarly dismissed. As soon as your case is tossed out of court, you no longer enjoy the protection of the court.
Notification
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When you file a bankruptcy petition, you must include a master mailing list that provides the name and addresses of all of your creditors. The court automatically notifies anyone on the master mailing list of any developments in your bankruptcy case, from discharge to dismissal. Some creditors receive electronic notifications from the court, so if you receive your notifications by mail, some of your creditors may actually hear about your dismissal before you do.
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Collection Calls
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As soon as the court lifts the automatic stay, your creditors are free to pursue you for the repayment of your debts. Usually, collection calls are the first step. Your creditors will begin calling you frequently to remind you of the terms of your contract and to ask when they should expect payment. Although creditors making collection calls must obey the Fair Debt Collection Practices Act, many collection calls are intimidating and certainly a nuisance.
Lawsuits
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The most dramatic step a creditor can take in pursuing an unpaid debt is to file a lawsuit against you. As you must sign a contract whenever you take out a loan, be it a mortgage, a car loan or a credit card, your creditor has a legal right to pursue enforcement of that contract. Unless the contract was signed under duress or your signature was illegally obtained, the court will tend to side with your creditor in a collection lawsuit. If a judgment is entered against you, your creditor will most likely win the right to garnish your wages up to 25 percent.
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