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423-954-7180

Lenders accused of taking debtors' funds after bankruptcy filings

One of the biggest protections that Tennessee residents can receive after filing for personal bankruptcy is a stay on actions of collection on their loans. During bankruptcy, a person is generally given time to either liquidate their assets through a Chapter 7 action or create a repayment plan through a Chapter 13 action. The idea is to give a debtor an opportunity to put themselves in the best possible position to alleviate their burdensome financial troubles and to emerge at the end of the process without debts.

Some debtors find, however, that some creditors do not respect their bankruptcy filings and still take actions against them while they are under the protection of the bankruptcy courts. Debtors have reported that payday lenders and other loan businesses have withdrawn money from their personal accounts to repay their debts after the debtors have submitted their bankruptcy paperwork. These actions may run afoul of bankruptcy laws and these entities may also violate usury laws by imposing massive interest rates on the people who use their services.

Having an entity take one's money while a debtor is in bankruptcy can be a painful and scary event. Individuals who reported this occurrence often struggled to pay other bills, such as those for their utilities, because of the withdrawals from their bank accounts.

It is important that individuals who file for bankruptcy understand their rights and what protections they are entitled to when they choose to file for Chapter 7 and Chapter 13 bankruptcy. Doing so can ease many of the concerns a debtor may have about working through the process of becoming debt free.

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Kenneth C. Rannick, P.C.
4416 Brainerd Road
Chattanooga, TN 37411

Phone: 423-624-4002
Toll Free: 800-257-7594
Fax: 423-624-0509
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