When you file for bankruptcy in Canada you immediately receive court protection. This protection is called a Stay of Proceedings and is the legal reason why your creditors stop calling after you declare bankruptcy.
Filing bankruptcy prevents your creditors from being able to contact you, garnish your wages, seize your bank accounts or even charging interest. There may however be a short delay in when your creditors stop calling after your declare bankruptcy.
The court protection from your unsecured creditors is technically in place immediately after signing your bankruptcy documents with your trustee. However, there is a logistical problem. You and your trustee are aware that these documents have been signed, but practically it takes time to inform your creditors. Legally speaking your trustee must inform your creditors within 5 days, but when you file with Goth & Company Ltd. your creditors will be notified within 1 business day. Unfortunately that doesn’t mean we are out of the woods yet. Just because your creditor has been notified doesn’t mean that they have acted on that notification or that they have been able to notify their entire organization. When you are dealing with a national bank or large lending institution it takes time for them to notify all their departments and any collection agency they may have sent your debt to for collection.
So in practice what we find is that even though the court protection is immediate and the notice is sent out quickly to your creditors, you may still receive a few calls. If one of your unsecured creditors calls you should follow these 4 steps so creditors stop calling after you file for bankruptcy:
- Answer the phone
- Inform them you have filed for bankruptcy
- Give them the name of your Trustee (for example Goth & Company Ltd.) and their phone number
- If you are asked for any more information, inform them you have been instructed by your trustee that you legally are not able to discuss this matter with them and they need to contact your trustee.
If you follow these four steps that should be the last you hear from these unsecured creditors. However, if you have a creditor continues to make harassing phone calls after you have told them of your bankruptcy, then contact your trustee’s office and they will instruct you how to proceed from there. While in most instances you won’t have to do this, every once and a while you will find a collector who doesn’t listen to your instructions and you need to involve your trustee.
If you are receiving collection calls from your creditors or a collection agency, it’s time to take action. Contact a Bankruptcy Canada trustee today. We can stop those collection calls for good.