As many Birmingham residents can attest, debt can quickly snowball out of control. Once a payment has been missed, late fees and interest can easily inflate the original amount owed on an account. Missed payments also have another unintended consequence: collection calls and harassment from debt collectors.
In today's economy, creditors often sell defaulted accounts to debt collectors and collection agencies. The Consumer Financial Protection Bureau currently estimates that 30 million Americans are subject to debt collectors. Although there are state and federal laws in place to protect consumers from certain debt collection techniques, the protection is limited. For many people, a personal bankruptcy filing is the best way to stop creditor harassment and get a fresh financial start.
Once a bankruptcy case has been filed, the automatic stay goes into place. This is a temporary injunction that prohibits creditors from trying to collect against a person while he or she is are in bankruptcy. It will stop lawsuits, wage garnishments and harassing phone calls. At the end of a bankruptcy, people will get a "discharge." The discharge is a permanent injunction that prohibits any further collection against dischargeable debts. Although there are some exceptions to discharge, most debts such as credit card bills, medical debt and personal loans are dischargeable.
If people are struggling with debt, a Birmingham bankruptcy attorney can assist them in reviewing all their debt relief options. Even if they are facing overwhelming debt, it is important to know that they have alternatives. A bankruptcy filing may be the best way to help you get a fresh start for the new year.
Source: ABC Action News, "Is it legal for a debt collector to call you - or even your boss - at work? How about family?, Rachael Mason, Jan. 6, 2013