» It is not a Good Idea to Tell a Creditor About Filing Bankruptcy Notes Iowa Bankruptcy Lawyer

It is not a Good Idea to Tell a Creditor About Filing Bankruptcy Notes Iowa Bankruptcy Lawyer

Des Moines, IA (Law Firm Newswire) March 14, 2012 – Some debtors immediately tell their creditors they are declaring bankruptcy. This is not always a wise move.

It is very tempting to tell a persistent and irritating creditor that there is a bankruptcy pending to stop them from having any further contact about an outstanding debt. However, it is not always a wise idea to share that kind of information with creditor noted Kevin Ahrenholz, a Waterloo bankruptcy lawyer. Warning the creditor can backfire, and since debtors do not have any protection until they file, it is best they wait until they do.

It is difficult to know what to tell creditors when they are calling at all hours of the day wanting to collect their due. However, if a debtor has not yet filed, what do they tell a creditor before filing or after they have filed? When a bankruptcy is filed, there is an automatic stay that goes into effect immediately. A judge specifically orders all collections activity to stop, which is a feature referred to as an automatic stay. This stay goes into effect for all bankruptcy filings and halts proceedings such as debt collection harassment, repossessions, evictions, garnishments, utility shut-offs, foreclosures and some lawsuits.

There are two schools of thought on what to tell a creditor about bankruptcy proceedings. Many lawyers feel that until an individual does files for protection, the debtor should not say anything. This is because the creditor may hurry their claim against the debtor, and file a lawsuit to get judgment. Some collections agencies may even write up a petition to challenge the automatic stay, which is a move that could make a bankruptcy proceeding even more complicated and expensive, Ahrenholz noted.

Other bankruptcy lawyers suggest their clients tell creditors they are going to file, as this may stop some of them from calling. Even though a creditor that has been warned of a pending bankruptcy may get judgment against the creditor, the judgment may be stopped in its tracks or removed with a successful bankruptcy.

There are other ways to get creditors to stop calling, and another one of them is to send the collection agency a cease and desist letter based on the Fair Debt Collections Practices Act. Once that happens, Ahrenholz explained, the collections activity must, by law, stop. Despite the two opposing points of view, telling a creditor too soon may work out to be a Catch 22. Never do that without first speaking to a competent Iowa bankruptcy lawyer to get their take on the problem.

Kevin Ahrenholz is an Iowa bankruptcy lawyer and Iowa bankruptcy attorney. To contact an Iowa bankruptcy attorney, Iowa bankruptcy lawyer, or set up an appointment, visit http://www.iowachapter7.com or call 1.877.888.1766.

Kevin Ahrenholz
309 Court Ave., Suite 805
Des Moines, IA 50309
1.877.888.1766
Offices in Des Moines, Cedar Rapids, Waterloo, Mason City, and Vinton.


  • Consumers in debt need to be aware of a scam that is taking place in this country by offshore criminals in the Far East, perhaps India.  This may be some of the fallout from the disclosure of personal information at Target in recent weeks.  Anyone who used a credit card at Target between certain dates in November and December may be at risk for having their personal information accessed and provided to offshore criminals who perpetrate these scams. One such scam involves someone from the Far East with a thick accent placing a call to a consumer who might be […]
  • Debt May be Added After Bankruptcy is Filed Indicates Iowa Bankruptcy Lawyer
    When a debtor files for personal bankruptcy, it only addresses pre-bankruptcy debts. Some types of post-petition filing debt may be added later. There are two routes to declare personal bankruptcy: Chapter 7 and Chapter 13. Chapter 7 is a liquidation plan that sells your assets to pay creditors and Chapter 13 is a re-payment plan, with money paid to the trustee on a biweekly basis. Those funds are then paid to creditors. Chapter 7 and Chapter 13 cover all debts prior to filing. However, only some types of debt may be filed later. If you have hired a bankruptcy lawyer, […]
  • When the Debt Load is Too Much, Bankruptcy Protection May Be the Best Answer
    It’s always good to pay your debts, if you can keep up with them. But if your debt is simply overwhelming, it may be time to file for bankruptcy. These days the main trigger for someone filing for bankruptcy is that they have lost their job. There are other reasons which may lead to bankruptcy, such as health issues, divorce, death, poor business decisions, a bad economy, foreclosure and following bad advice. No matter what the reasons are that lead someone to file, the process for bankruptcy remains much the same for everyone. The differences lie in the circumstances that […]

See other news sources publishing this article. BETA | Tags: , , , , , , ,



Get headlines from Law Firm Newswire sent right to your inbox.

* indicates required