You don’t have to tell a creditor that you’re filing bankruptcy before you file. Doing so may or may not help you simmer down collection calls. Once your case is filed, the court notifies your creditors.
Few people get enjoyment from talking to creditors. If you’re considering filing bankruptcy, you may be worrying about the technically correct way to give your creditors notice about your bankruptcy court case. You’ll be happy to know giving notice to creditors is rather straightforward and bankruptcy can take that worry off your shoulders. If you’d like to know the details about noticing creditors, keep reading and we’ll explain how creditor bankruptcy notice requirements apply before, during, and after filing bankruptcy, and how you can keep your creditors up to date about the status of your case.
Preparing to File Bankruptcy
People file bankruptcy for different personal reasons, but they have one thing in common: debt. They want debt relief, and debt is unmanageable. The Federal Reserve reports that consumers in the United States have over $14 trillion of consumer debt. Many people wait until collection calls are unbearable and wage garnishments start before filing bankruptcy. Debt is difficult to manage, but you don’t have to wait to file bankruptcy until your bank account is suddenly levied or your car is repossessed.
Bankruptcy helps credit card debt, debt from medical bills, personal loans, back rent, old cell phone bills, and utility bills, and other types of consumer debt. This type of debt is unsecured debt and gets cleared up for good so you can get a fresh start.
Most people file a Chapter 7 bankruptcy or a Chapter 13 bankruptcy. People with higher wages and assets tend to file a Chapter 13 bankruptcy and hire a law firm or solo attorney so they can get legal advice on non-exempt assets and enjoy attorney-client relationship privileges. Chapter 7 bankruptcy filing is less complex, especially if you don’t have any assets. You must fall within certain income limits determined by a means test to see if you can file for Chapter 7 bankruptcy.
You can file Chapter 7 on your own, and Upsolve has a website app that can help you during the bankruptcy process. But, a bankruptcy court case is best handled by a bankruptcy attorney that specializes in bankruptcy procedures. There are several court rules and bankruptcy laws to follow and forms to file. Your first step is to get information together.
Collect Your Creditor Information
Before you file your bankruptcy petition, get a list of your creditors together. Your bankruptcy petition requires you to list every debt you owe. If you forgot a creditor, you can add it later, but there are big advantages when you get it right the first time. Creditors will get notified faster, collection efforts will stop earlier, and you won’t have any unnecessary hiccups in your bankruptcy case.
For every creditor, you’ll need the name, address, and amount you owe. This sounds daunting, but it’s a hill you can climb.
Here’s a starter task list to guide you:
Get a copy of your credit report from TransUnion, Equifax, and Experian.
Gather collection letters, bills, and legal notices.
Go through your wallet and pile of bills and get the names of all your credit card companies.
Make a list of medical bills.
Make a list of utility bills, back rent, and old cell phone bills in collection, and get the company contact information.
Get your bank statements from the last three months, review them for debt payments.
Collect your mortgage loan, car loan, student loan, and personal loan agreements.
Gather proof of income and make a list of your expenses.
Get a copy of your most recent tax filing.
Make a list of every creditor, debt collector, and collection agency. Compare the information on the credit reports. Write down the contact information and approximate debt amount for every debt you owe. Every unsecured creditor will go on your bankruptcy petition, and you’ll need to know your approximate total debt and the value of your assets.
If there’s one thing that can make your case go smoother, it’s getting all the creditor information on the bankruptcy petition accurate and complete.
The names and addresses of these creditors will go on a form called a mailing matrix. This mailing matrix is used to mail creditors notice of your bankruptcy filing. These notices have huge benefits, which we will discuss below.
Do You Need to Notify Creditors BEFORE Filing?
Creditors might like you to notify them of your future bankruptcy filing so they can ramp up collection activity or talk to their attorneys. But, you’re not required to notify creditors you’re filing bankruptcy prior to filing bankruptcy. Creditors might also stop collection activity while they try to sell your debt or make a last-ditch effort to get a bank levy or wage garnishment. If your wages are already garnished, collection is not going to stop simply because you told a creditor you’re filing bankruptcy. Many types of wage garnishments can stop when you file bankruptcy.
Creditors might stop phone calls just to be cautious they’re not violating any debt collection or bankruptcy laws. If creditors contact you and you have a bankruptcy attorney, tell the creditor to call your attorney or the law firm representing you, and give them the phone number and address. Creditors must abide by that request because of laws under the Fair Debt Collection Practices Act (FDCPA). The ability to pass along creditor phone calls is another reason to have a bankruptcy attorney file your case!
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Upsolve User · April 30, 2020
My debt was discharged as of yesterday (just saw it today)! I am so excited! It’s like a breath of fresh air ☺️ Upsolve helped me discharge over $200,000 in debt. I am forever grateful for this service.
Upsolve User · June 25, 2019
I would like to say thank you upsolve I had my 341 meeting today and it was 4 minutes very easy the trustee asked me if upsolve charged me anything which I said no its a non-profit organization and the trustee said you did well and good luck to you 🤩🤩🤩 wait on my discharge
Upsolve User · July 9, 2020
The discharge finally registered on my credit report - I'm up 204 points from when I filed in February... Upsolve works!
Filing the Case
Once you have your creditor list in hand, you can feel relieved the hardest part is probably over—but you’re not off the hook yet. You still have several bankruptcy forms to complete. When you file your bankruptcy petition, it’s your responsibility to make sure all creditors are listed. Using the mailing matrix, all creditors are notified automatically about the bankruptcy case. If there was a wrong address or old address, you’ll get a Notice of Undeliverable Mail, and the court will instruct you how to correct the address. Proof of claims must be made by creditors, but that can’t happen if they don’t get a notice.
Why is it so great that your creditors are notified about your bankruptcy court case? Because an automatic stay goes into place as a part of the bankruptcy protection. By law, once your creditors are notified by the court that you filed a petition for bankruptcy, all collection efforts by your creditors must stop. Sometimes a little extra effort is needed for wage garnishment, and notice needs to be sent to a sheriff to stop allowing the wage garnishment. A bankruptcy attorney can give you more advice on bankruptcy and how the stay applies to garnished wages, bank levies, judgments, and recent lawsuits.
What Happens Next?
The automatic stop to collection activity is a ray of sunshine in the bankruptcy process, but what you really want is the bankruptcy discharge that can wipe out debt from unsecured creditors permanently. There are a few more steps in the bankruptcy process before you can get the discharge.
After you file your bankruptcy petition, you must prepare for the 341 Meeting of Creditors. The court will notify you and the creditors of the date and time. You’ll meet with a bankruptcy trustee, and the trustee will be dealing with the accounting and creditors. You must provide requested documents on your income, assets, debts, and expenses to the trustee. If you forgot a creditor, you can fill out a form to add a creditor.
Proof of claims sent by creditors are reviewed by the bankruptcy trustee. The proof of claims is an explanation of the types of debt from the creditor. Often, especially for Chapter 7 bankruptcies and small accounts, creditors don’t appear at the Meeting of Creditors (341 meeting). After the 341 meeting and before discharge, you must take another financial counseling course. For Chapter 7 filers, the hardest work is done!
After you’ve met all the requirements under the Bankruptcy Code and your repayment plan is complete (in case of a Chapter 13 filing), you’ll get a bankruptcy discharge order that takes over for the automatic stay, but this order to stop collection for discharged debt is permanent, not temporary. That mailing matrix? At the discharge phase, it sends notice to all creditors that your qualified bankruptcy debt is permanently resolved and those discharged creditors can no longer continue collection activity.
Your bankruptcy discharge is the key to resolving debt problems permanently. The bankruptcy order of discharge is an injunction order that permanently stops all collection activity for discharged debt, even after bankruptcy. The order means your discharged accounts will have a zero-dollar balance. If a debt collector continues to try and get money from you after your order of discharge, you should contact your attorney or get legal advice right away so the violation can be managed.
In a Chapter 7 case, you’ll probably get your discharge order four to six months after the date you filed your bankruptcy petition. All creditors get a copy of the discharge, even if the debt is not discharged. Dischargeable debt is unsecured debt like credit card debt, medical bills, back rent, and old utility bills. Non-dischargeable debt is specified in the United States Bankruptcy Codes and includes recent IRS debt, child support, alimony, and usually, student loans. Court fees, fines, and certain DUI liabilities are not dischargeable. The non-dischargeable debt won’t go away in bankruptcy, although student loans are sometimes resolved due to extreme hardship.
It’s important to keep a copy of the order of discharge for proof of the discharge. It’s needed for creditors, to repair your credit report, and to resolve disputed debt. Your bankruptcy discharge should be on your credit report. If it’s not, the absence could be a violation of the U.S. Bankruptcy Code and debt collection laws.
The bankruptcy mailing matrix that evolves from your bankruptcy petition is key to notifying creditors of your bankruptcy action. You don’t have to tell a creditor that you’re filing bankruptcy before you file. Doing so may or may not help you simmer down collection calls. Bankruptcy actions have a lot of “notice” requirements, but once your case is filed, the court takes care of most of the notices for you. Getting a complete and accurate list of creditors together is one of the most helpful steps you can take to get the bankruptcy ball rolling to knock down your debt to make way for a fresh start!