Will filing for Chapter 7 Bankruptcy stop collection efforts?

Filing for Chapter 7 Bankruptcy in California will stop collection efforts from most creditors. By filing for bankruptcy, an Automatic Stay is granted which puts a stop to any collection efforts from creditors. This Automatic Stay will remain in effect until the case is closed, dismissed, or a discharge is granted. The stay applies to all types of collection activities, including phone calls and letters from collection agencies, garnishments, foreclosure proceedings, lawsuits, and seizures of property. It will also prevent creditors from calling you at work. Creditors who try to collect a debt during the Automatic Stay can be held in contempt of court. However, not all collection efforts will stop when filing for Chapter 7 Bankruptcy. Certain secured debts, such as mortgage and car payments, must still be paid in order to avoid foreclosure or repossession. Collection efforts from the Internal Revenue Service (IRS) and other governmental agencies may also continue, as these are not covered under the Automatic Stay. Although filing for Chapter 7 Bankruptcy will stop most collection efforts, it is important to remember that the case must still be finalized and a discharge granted in order for the creditors to cease their activities completely. Until then, creditors who are aware of the bankruptcy filing may be more willing to settle debts, as opposed to pursuing collection efforts.

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Will filing for Chapter 7 Bankruptcy stop collection efforts?

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