A bankruptcy discharge is intended to give you a clean slate. With legal responsibility for many unsecured debts eliminated, you have the freedom to move toward greater financial stability. The peace of mind that clean slate offers is disrupted when debt collectors pursue collection of discharged debts. Here’s what to do when facing debt collection after bankruptcy.
Bankruptcy Discharge Violations
The bankruptcy discharge is a court order, and debt collectors who continue to pursue discharged debt in violation of the order can be subject to sanction by the bankruptcy court. Reopening the bankruptcy case to ask the court to sanction a debt collector is just one of the possible remedies available to a bankruptcy petitioner whose discharge is ignored. Different types of discharge violations may also violate consumer protection statutes, such as the Fair Debt Collection Practices Act (FDCPA) and the Fair Credit Reporting Act (FCRA).
Unfortunately, debt collectors often violate the bankruptcy discharge order and, in doing so, the FDCPA, FCRA, or both. In some cases, pursuit of a debt that has been discharged in bankruptcy may also violate state consumer protection laws.
Unlawful Post-Bankruptcy Actions by Debt Collectors
Debt collectors seem to invent new ways to violate the law and harass debtors every day, so it’s impossible to predict every post-bankruptcy action they might take in violation of the bankruptcy discharge order or a state or federal consumer protection statute. However, there are some common violations those who have successfully completed a bankruptcy and faced debt collection after bankruptcy should be on the lookout for.
- When a discharged debt is reported to credit reporting agencies as delinquent, or continues to show a balance due, the creditor or collection agency is potentially in violation of both the bankruptcy discharge and the Fair Credit Reporting Act. This type of reporting occasionally occurs through an honest mistake and will be corrected when the item is disputed with the credit reporting agency. However, continuing to report the debt is also a tactic some debt buyers and debt collectors use in an attempt to force payment of a debt the bankruptcy filer is no longer legally responsible for.
- When a debt collector tells a debtor that he or she is still responsible for discharged debt, or threatens to sue to collect discharged debt, the entity is likely violating both the bankruptcy discharge and the Fair Debt Collection Practices Act. The FDCPA prohibits debt collectors and debt buyers from misrepresenting the legal status of a debt, and from threatening to take action they cannot legally take or do not actually plan to take.
These are just two of the most common ways in which debt collectors may violate the bankruptcy discharge and consumer protection laws. Often, debt collectors that employ these tactics will attempt to provide some sort of rationale for the debt being collectible.
For example, some debt collectors or debt buyers will tell the consumer that while the debt to the original creditor was discharged, they are a different entity and are not subject to the discharge order. The truth is that an original creditor who sends a discharged debt out for collection has himself violated the bankruptcy discharge order. However, dishonest debt collectors count on consumers not understanding the complexities of the law and may attempt to trick you into paying a debt you no longer owe. Thus, it is very important that post-bankruptcy consumers seek out reliable information, rather than acting on representations by debt collectors.
If you are facing debt collection after bankruptcy or received a collection notice relating to a debt that was discharged in bankruptcy, or debts that were discharged in bankruptcy are still appearing on your credit report, contact us today to learn more about your rights and options. Just call 855-472-4877 or fill out a contact form.