How to Stop Creditors

The day you file the petition, the automatic stay (in the bankruptcy code) requires creditors to stop their collection activities. Garnishments and levies must stop immediately.  Filing bankruptcy is the best to stop creditors.

Certain activities are still permitted, however, in certain instances:

Criminal prosecution.  You can still be prosecuted for crimes.

Domestic support actions. Domestic support actions by an ex-spouse or the state (even against exempt property) will not be stopped by the bankruptcy.

Setoff. If you have deposits with a creditor such as a bank, the creditor can “setoff” what it owes you (like your deposits) against what you owe it. Therefore, if you owe your bank or credit union money it may be best to have as little as possible in the account on the date you file.

Loans against retirement. Withholding from the debtor’s wages and collection of loan amounts due as a result of the debtor’s borrowing from employer sponsored pension, profit sharing, stock bonus, or other plans recognized by the IRS as tax exempt.