They whine, they complain, they badger and occasionally they throw tantrums when trying to collect their debt.
Unfortunately, they share none of the endearing qualities of the children they imitate.
When a bankruptcy case is filed, your creditors will engage in extremely immature behavior and often times straight up shun you.
They will act like children, literally and figuratively.
You are a Second Class Citizen
This is how your secured creditors will treat you when you file bankruptcy.
When you file bankruptcy, you will need to understand how the relationship between yourself and your secured creditors will change. This should be discussed with your attorney prior to filing.
Secured debt is basically a loan that is “secured” by a lien on specific property owned by the borrower.
This lien gives the bank security. Should you default on your loan repayment, the bank has the right to take the property from you. This usually comes in the form of repossession or in the case of real estate, foreclosure.
If you intend to keep the property securing the debt (car, house, etc.), the debt will need to be paid through and after the bankruptcy process.
Unfortunately, the lender will make this process difficult by refusing to talk to you (because it’s the law), refusing to accept online payments and by erecting other barriers to make your financial existence more difficult.
In addition, creditors will stop sending billing statements so the burden is on you to stay on schedule with payments.
Your loan will often be transferred to a mysterious “bankruptcy department” at the bank where communications become tiring, difficult and often must go through your attorney.
Getting Through the Tantrum
For most debtors in bankruptcy, this shunning is a minor inconvenience that can be dealt with in a number of ways.
Some banks are more “mature” than others and actually try to facilitate a smooth ride through the bankruptcy process.
Bankruptcy attorneys will usually know and understand the bank’s quirks and be able to communicate that to you prior to filing. This can give you an understanding of what to expect.
Many banks will accept authorization from your attorney to resume communications with you. This authorization could also reinstate the mailing of billing statements to make your life easier.
Finally, you will be confronted with the option of reaffirming your secured debts.
This may be the right decision for your auto loan but is almost never the right decision for your home loan.
Approach reaffirmation agreements with caution and with the guidance and advice of an experienced bankruptcy attorney.
Riding it Through
Dealing with “immature” creditors is one of the negatives that will have to be confronted when you file bankruptcy.
Again, some are worse than others and it is not always a problem.
At worst, it is a minor inconvenience that could easily be confronted to get the benefit of a debt free financial future.
Image courtesy of my Son Paxten being naughty standing on the coffee table.