What effect does filing under Chapter 13 have on lawsuits filed against me?

Under federal law, the filing of a Chapter 13 case automatically stops or stays all lawsuits, attachments, foreclosures, garnishments, repossessions, and other actions by creditors against either you or your property.  A few days after your case is filed, a notice is mailed by the Bankruptcy Court or Trustee to all of your creditors advising them of this automatic stay.  The creditors may be notified sooner by either you or your attorney if necessary.

Once you are protected from your creditors under the Federal Bankruptcy Laws of the United States of America, we advise our clients to simply tell any creditors that continue contact them that they have filed for Chapter 13 relief and that they are represented by the Consumer Law Center, Inc.  Clients are also advised to provide their case number and our telephone number (408) 294-6100.  This is all you need to say to any creditor.

If you receive any verbal or written demands from creditors more than four (4) weeks from the date your case was filed, please notify your attorney.  If the contact is by telephone, then you need to obtain the telephone number of the person calling you, the name of the creditor or the collection agent, the mailing address for such party, the name of the person who called you, and how much money they want you to send.  The best way to get this information is to "act stupid" and "be nice."  If the contact is by mail, then you need to save the envelope for proof of the postmark date.  You should notify your attorney of any such contacts.

Please note that creditors who contact you after being advised of your bankruptcy case are subject to various sanctions for contempt of Court and other violations of Federal Law.  In many cases, the Bankruptcy Court will order such creditors to pay money damages to you (including legal fees to your attorney) for such violations.  The Consumer Law Center, Inc., always takes these cases on a contingency fee arrangement.  In short, unless your attorney recovers money damages from these creditors you will not owe him any additional legal fees for pursuing these type claims.  Please be assured that the Bankruptcy Court takes these matters very seriously and that they are vigorously pursued by the Consumer Law Center, Inc.