U.S. Bankruptcy Code imposes something called an automatic stay the moment that a petition for bankruptcy is filed. The automatic stay will usually halt the commencement, enforcement or appeal of actions and judgments against a debtor from the creditors they owe money to that are attempting to collect these debts incurred prior to the bankruptcy petition. In addition, the automatic stay protects property of the bankruptcy estate itself from collection actions and proceedings.

If a creditor violates the automatic stay their actions are voided out. Any violation of the stay might cause the violating party to have damages assessed to them. But, like every complicated law, there are exceptions. A creditor might be allowed to take their collateral if they obtain permission from the court first. They’ll get this by filing a motion for relief from the automatic stay.

The court will either grant the motion or provide security to the creditor, ensuring that the value of their collateral won’t decrease during the stay. Without the protection of the automatic stay creditors could hypothetically race to the courthouse in order to improve their positions against a debtor. If this happened, and let’s say that a debtor’s business was facing just a temporary crunch, it might not survive a “run” by creditors when their business could otherwise be salvaged. A run may also result in waste and it might be unfair to similar creditors that are owed money too.

There are three kinds of avoidance actions, and all of these are intended to limit the risk of the legal system prompting the downfall of a financially unstable debtor who hasn’t yet declared bankruptcy. The bankruptcy system will generally reward creditors who continue extending financing to debtors and will discourage creditors from ramping up their debt collection efforts.

Despite the fact that these rules are seemingly simplistic, a number of exceptions exist for each type of avoidance action.

Mallory Megan is employed by a debt collection agency. Also, she does stories on business and finance, the credit industry, and collection agencies.

Would you be mortified if a man in a tuxedo and a top hat followed you into a restaurant and silently joined your lunch date? How about a trio of men with more to love dressed like superheroes asking your neighbors for donations to assist you in your financial situation?

In Madrid, make sure your bills are paid or you might be visited by one of these colorful characters. The recession has slammed Spain. Official figures show that the unemployment rate has sky rocketed, reaching 19.3 percent. That’s one of the highest rates in Europe. Around four million people are not working. That’s the same number of jobless people as France and Italy put together. One business is flourishing however, that business is debt collection.

Spanish law is pretty lax when it comes to debt payment. They allow 95 days to settle bills unlike the 30 in other parts of Europe. This, coupled with the fact that Spanish courts give the matter low priority put collection agencies in high demand.

One debt collection company, El Cobrador del Frac – which can be translated as “The Debt Collector in Top Hat and Tails” – has more than 250 collectors, and an equal number of investigators and secretaries.Their main goal is to work out some deal and retrieve money, not to run after people without the money to pay.

For them, the new business stems from constructive trade which is suffering badly from a huge slowdown. Homeowners owe money to contractors, contractors owe money to construction companies, construction companies owe equipment makers, and so on and so forth.

Last year, the company had a wedding company contact them about a couple who didn’t pay the $83,000 bill for their huge over the top wedding. The company obtained a wedding guest list and began calling up guests one by one on the phone and asking them if they had the chicken or the lobster, and then asked them where to send the bill. Eventually the shamed couple paid up.

These ideas are quirky, (I guess that is one way to describe it) but they will not be this effective in times to come. In this time of economic crisis, too many people have debts and they honestly can’t pay. And to these people, it doesn’t matter how much you humiliate them.

Mallory McGuinness is employed by a debt collection company. She also does stories about business, finance, consumer spending and debt collection.

It is true that Americans with outstanding debts will usually suffer from a number of punishments. Collection letters, phone calls, unfavorable credit scores and a chance to wind up in court are examples of retributions for non-compliance.

However, a new trend that is growing is debtors suing debt collectors first. Any violation of the Fair Debt Collection Practices Act can be valid reason alone to take a collector to court. It might be true that in a declining economy suing a debt collection agency instead of paying off what you owe may be your only choice. There were 8,347 consumer lawsuits filed against collection companies in 2009. That’s a 55 percent increase over 2009 and double that number filed in 2007.

A portion of the debtors are plaintiffs suing for the first time, who suddenly find themselves unable to pay debts, and they feel that they have been wronged by aggressive collectors. Others compulsively sue. Usually these people have debts worth tens or hundreds or thousands of dollars. It is their hope that favorable judgments may put them on a “collections blacklist.” If he has sued 4 out of 5 debt collectors, debt collection agencies are probably going to want nothing to do with this strange character who puts time and effort into lawsuits when he could be looking for a sense of structure, and a job.

One example of a current lawsuit in action was from a woman who alleges that the collection agency never offered her proof it was entitled to collect. Seriously? Most debt collection agencies adhere closely to FDCPA laws, but even that law is foggy on certain practices such as whether it’s legal or not to leave a voice mail. Basically, the FDCPA hit the scene in the 1970s and needs desperately to be updated to today’s technology.

You might not want to know my opinion, but here it is. I was contacted by a debt collector who left a message on a third party phone, asking for me and letting me know she intended to collect a debt. This is a big no-no. I could have called her and given her hell, but I know why I have the debt and even though I may be broke, I intend to pay it back. To me, it seems like the economy is not getting better any time soon as the number of people who refuse to hold themselves accountable for financial decisions they made in the past grows. I hate to say it, but a debt is a debt, whether we are in a recession or not.

Mallory Megan works for a debt collection company. She also writes pieces on business and finance, consumer spending and debt collection