Understanding the Rights and Limitations of Creditors
May 24, 2023
For many, the idea of declaring bankruptcy is a last-resort option that they’d just as soon avoid at all costs. While it is true that you shouldn’t make this decision lightly, it also may be the best step forward, depending on your situation. When you decide to file for bankruptcy, you’re making a long-term plan for your future that will ultimately leave you in a better financial position. Also, one of the added benefits of bankruptcy is that it can alleviate the pressure you feel from creditors and bill collectors who may be calling and harassing you nonstop.
To learn more about bankruptcy and creditor harassment, give us a call at the Rushing Law Firm, PLLC. Our goal is to meet our clients where they’re at—without judgment—and provide the best legal support and guidance we can. Call us today if you're in the El Dorado, Arkansas, area, including Magnolia, Camden, Crossett, Union County, Columbia County, Ashley County, or Ouachita County.
Consumer Rights Laws
Fortunately, consumers are protected under federal and state laws against unethical credit collecting practices.
Fair Debt Collection Practices Act (FDCPA): The FDCPA is a federal protection for consumers across the country that was brought into law in 1978. This law restricts the language and tactics that creditors can use when contacting customers who are past due on payments for debts such as past-due mortgages, auto loans, credit cards, or medical bills. This includes outlawing abusive, unfair, and deceptive language, and misrepresentation of themselves or the amount owed during creditor calls to collect on a payment.
Fair Credit Reporting Act (FCRA): Also a federal law, the FCRA restricts the ways consumer data can be accessed, collected, used, and shared. It also helps ensure that consumer data is accurate and that this information will be provided to consumers when they request it.
Arkansas Law: Arkansas has its own Consumer Protection Division that supports residents with state-specific legislation, including the Arkansas Deceptive Trade Practices Act (ADTPA). This law prohibits businesses from advertising or selling goods and services in a “deceptive and unconscionable” manner and sets up avenues of redress for consumers who were deceived or taken advantage of.
When consumers are past due on paying their debt obligations, there are creditor rights that outline the steps they can take to collect. Common practices for this include calls, emails, and sending notices through the mail. In some cases, they can even put a lien on your property or file a lawsuit against you.
However, there are certain actions they can’t take. For example, a creditor can only contact you between the hours of 8:00 am and 9:00 pm unless you’ve given them specific permission to call outside of this window. If they violate this provision, then you can report their actions. They’re also prohibited from contacting you at your place of employment if you tell them that you’re not allowed to receive calls there.
If you feel the bill collector's calls or actions have violated one of these laws, the best thing you can do is reach out to an attorney who can help you decide the next step to protect your rights. This could include filing a complaint with the Consumer Financial Protection Bureau (CFPB) or filing your own lawsuit against them for damages.
Bankruptcy Effects on Creditor’s Rights
One way consumers address mounting unpaid debt is by filing for bankruptcy. Once your application has been approved, this has the immediate effect of implementing an automatic stay. An automatic stay is a legal order that all your creditors must obey, meaning they must cease all attempts to collect on debt immediately. This can provide much-needed relief for consumers as they work with their lawyer and the court to establish a plan under their bankruptcy declaration.
If you filed under Chapter 7, this means that after you liquidate your non-exempt assets, any eligible debt will be discharged. I
If you filed under Chapter 13, you’ll establish a repayment plan that will be in place for three to five years.
In either case, it is illegal for creditors to keep contacting you after your filing has gone through.
In most cases, the automatic stay is very effective, but there will be times when creditors don’t respect the stay or your debt discharge. If this happens, you have recourse options. Your attorney can help you contact the court to report creditors who are in violation of the automatic stay who can then order them to stop and potentially pay sanctions, including associated costs and attorney fees.
Turn to Rushing Law Firm for Help
If you’re in the El Dorado, Arkansas area and would like to know more about your options for filing bankruptcy and what effect this will have on your creditors, reach out to us at the Rushing Law Firm, PLLC, to set up a consultation.