Your bankruptcy discharge is supposed to stop creditors from collecting.
But sometimes it seems that a debt won’t die. Or the creditor won’t give up.
Usually this is because the original creditor, listed in the bankruptcy, sold off its bad debt to a debt buyer. The original creditor didn’t bother to note that the debt was discharged in a bankruptcy.
The debt buyer attempts to collect, not knowing the debt isn’t legally collectible. Consequences of suing on discharged debt.
The first thing to do is pull out the discharge order and provide the collector making the demand with a copy of the discharge order, including if possible, a copy of the schedules listing the original creditor.
If you don’t have a copy of the discharge, you can get a copy from PACER.
Give the collector the details of your bankruptcy filing in writing as well as on the phone.
- Recite the case number, date of filing, and date of the discharge order.
- Demand an end to collection.
- Send the letter return receipt requested. Make sure there is no doubt the collector got your letter.
Keep copies of everything you send to the creditor.
In most federal circuits, even debts that weren’t listed in your bankruptcy schedules are discharged, if your case was a no-asset Chapter 7 case in which creditors got no distribution. In the 9th Circuit, the case that stands for that proposition is Beezley.
So don’t belief the collector’s claim that since he didn’t know or wasn’t listed he’s entitled to collect. Not so.
Enlist the judge’s help
If the collector persists, you can ask the bankruptcy judge for help. After all, it’s the judge’s order that’s being ignored.
Most judges don’t care for that.
Contact your bankruptcy attorney for help enforcing the discharge. You’ll have to file a motion for sanctions for violation of the discharge and serve it on the bad acting creditor.
The Bankruptcy Code allows the judge to award you the attorneys fees and damages or sanctions that you incur in enforcing the discharge.
If the debt buyer had no reason to know about the discharge, you may have a violation of the Fair Debt Collection Practices Act. A wider range of damages may be available to you as a result.
Bankruptcy attorneys are becoming more active in court room attempts to get the debtor the peace that the discharge is supposed to provide. Judges are expected to order the creditor to pay the debtor’s attorneys fees incurred in enforcing the discharge.
Pull a credit report
Check your credit report as well. The debt buyer may have reported non payment of the discharged debt to the credit reporting agencies, compounding the problem.
Any damage to the debtor’s post bankruptcy credit record may be another element of damages caused by the violation of the discharge order.
Be proactive and get the full benefit of your discharge.
Image courtesy of Francesco Rollandin