A collection agency recently told me that they could contact all of my creditors to whom I owe money and then contact the bankruptcy court to have my assets seized and sold to satisfy the debts. Can they do this? I have not filed for Bankruptcy.
You didn’t mention what the debts are so I’ll assume you have some secured and unsecured debt.
The collection agency not only lied to you, they used an illegal threat (calling 3rd parties and the bankruptcy court) Begin recording all calls to protect yourself in the future and report their activity to your state attorney general. For secured debt, the creditor is the only one who can seize the item (car, boat, TV, house etc). In the case of a home, the creditor must go through foreclosure proceedings.
For unsecured debt, only IF you file bankruptcy, does the bankruptcy court become involved. Then, unsecured creditors can ask the bankruptcy court to force you to file a chapter 7, if they don’t want to accept your chapter 13 terms. The courts don’t always support the creditorrs’ requests.
Collectors have no say in bankruptcy proceedings unless they hold a judgment against you. To do that, they have to own the debt and then convince a court to grant a judgment.
See my site for more info on default judgments.