During my first meeting with a new potential client, it’s not unusual for that person’s cell phone to be ringing repeatedly. Usually it’s call after call from bill collectors or collection agencies. Once we get a bankruptcy case filed, most such calls will slow down and then finally stop within a few days. This is because of what is technically called the “automatic stay” – a court order issued as soon as a bankruptcy case is filed which tells all the creditors to leave the debtor alone and to stop all collection efforts. I tell my clients to let me know if a creditor doesn’t seem to have gotten the word about the bankruptcy. It might be that there’s a creditor that wasn’t listed and that needs to be added to the creditor list.
Lately, however, I’ve been hearing from my clients about harassment which they are receiving from sources other than bill collectors. For one thing, there are disreputable credit counseling services which are sending out advertising disguised to look like letters from a bill collector. A client faxed me one not long ago, and it had me fooled. It certainly looked like something from a creditor to me. In fact it looked like a notice that the creditor had scheduled an arbitration hearing. I thought it needed immediate attention, so I called the number on the “Debt Mediation Notice.” I told them about the bankruptcy and asked them which creditor they represented. To my surprise they told me that they were a debt settlement service and they didn’t represent anybody. They weren’t trying to collect a debt. They wanted to help my client settle his debts, which obviously was not possible since a bankruptcy had already been filed.
So now when you go in debt apparently one can expect to be harassed not only by creditors, but by businesses that market their services to those who are in financial distress. I find such marketing to be a despicable practice, particularly when it is misleading. Since I saw that “Debt Mediation Notice,” I have been wondering how such organizations would get information on who is in financial trouble. I believe that this afternoon I may have received some insight on that.
I have just received two emails from an outfit that is offering to send out junk mail on my behalf which would be addressed to “homeowners in your area that are 60 or 90 days late on their mortgage payment and/or with late credit card debt balances of $20,000 or more.” They don’t say where they are getting the mailing list for that, but my best guess would be that there must be a credit reporting agency which is selling that information. If that’s legal, somebody ought to pass a law making it illegal.
Filing a bankruptcy only stops the stuff coming in from creditors and bill collectors. Other materials intended for the financially distressed are not affected. Another thing that’s not affected is junk mail from agencies that do the post-bankruptcy-filing counseling. Before filing a case I usually have my client signed up for the required counseling program, but this doesn’t stop aggressive and misleading mail advertising those counseling agencies. Some of the materials contain statements to the effect that the bankruptcy will be dismissed if the counseling is not completed. There may be some truth in that, but the counseling doesn’t have to be done with the outfits that are mailing out that sort of thing. I’ve had some clients get pretty upset upon receiving some of these materials, particularly elderly clients who aren’t used to how misleading some things can be.
So I have deleted those emails which offered to do a mass mailing for me to people who are in financial trouble. I would suggest that if you receive anything like that from one of my fellow lawyers, definitely don’t call that person. Run the other way.