When Creditors Come Calling After Your Bankruptcy Discharge

You don’t owe anymore after bankruptcy. Let’s repeat that: You don’t owe anymore after bankruptcy. So why are creditors still bugging you?

The bankruptcy discharge eliminates your obligations to pay debts included in your bankruptcy filing. If you listed it and you received a discharge, then you are no longer responsible or liable for that debt. Most people think that that means no more telephone calls, dunning letters, or lawsuits from people trying to collect on that debt. For the most part, that is usually the case; however, there are many creditors and third-party debt buyers who choose to ignore this very basic tenet of bankruptcy law.

Why Collectors Still Call After Your Bankruptcy Discharge

Some may honestly not know that either (A) you went through bankruptcy or (B) what it means to have a debt discharged. For these creditors, a simple telephone call or letter from you or your attorney will usually stop their collection activity. If the action of one of these creditors is relatively minor — for example, a telephone call or letter seeking payment of the debt — and they immediately stop their collection efforts when informed of the bankruptcy, then as they say in the sporting universe, “no harm, no foul.”

For others, however, it isn’t as simple. There are some creditors who may take your bankruptcy personally and persist in trying to collect on a discharged debt. Worse than these, however, are the debt buyers who know they are breaking the law and figure that the majority of people won’t put up a fight. They purchase old and/or discharged debt for pennies on the dollar and if only a portion of the people they contact pay them, they will make a profit.

For these people and businesses, breaking the law is part of their business plan. That’s the bad news. The good news is that you can successfully fight back and not pay them your hard-earned money.

Creditors Who Ignore the Discharge Order are Violating Federal Law

When a creditor or debt buyer persistently tries to collect on a debt that was discharged in bankruptcy, that creditor is violating federal law, namely section 524 of Title 11 of the United States Code. This is otherwise known as a bankruptcy discharge violation. This is the section of the bankruptcy code that states that a discharge:

“operates as an injunction against the commencement or continuation of an action, the employment of process, or an act, to collect, recover or offset any such debt as a personal liability of the debtor….”

An injunction is a legal term that means that no one can take any action against you regarding a discharged debt. If they do, they are violating a federal judge’s order.

See also: ‘Friendly’ Creditor Phone Calls and Emails Held to Violate the Bankruptcy Discharge

How to Stop Creditors from Calling? You May Need to Resort to Legal Action

So if you successfully completed a bankruptcy and are now on the receiving end of somebody’s telephone calls, dunning letters, or lawsuit regarding a debt that existed before you filed your bankruptcy, you need to talk to an experienced bankruptcy lawyer. If the offending creditor will not voluntarily stop their collection efforts against you, legal action against them must be considered. In many instances, the creditor is required to pay your reasonable attorney fees — and you also may be entitled to compensation for their violation of the bankruptcy code.

If you are being harassed by creditors, don’t hesitate to contact a bankruptcy attorney who is experienced in these matters. National Bankruptcy Forum can help you find a local bankruptcy attorney near you. The initial debt consultation is always free, and we’re standing by 24/7 to help. And if you’re just considering bankruptcy for the first time to get rid of those annoying collector calls, take the next step today in rebuilding your financial future.

You may also be interested in:

• What Happens at a Typical Bankruptcy Consultation?
• Debt Collectors in the US You Need to Know
• Tax Refund and Bankruptcy? Here’s How to Keep Your Money
• Should Filing Bankruptcy Be the Last Resort?
• How Often Can You File for Bankruptcy and Receive a Discharge?

Erik Clark

Erik Clark is one of the leading bankruptcy attorneys in Southern California who has had the privilege of representing thousands of clients in chapter 7 and chapter 13 bankruptcy cases in the Los Angeles area. Erik has served as the past President of the National Consumer Bankruptcy Litigation Center (NCBLC) and the American Consumer Bankruptcy College (ACBC). His firm, Borowitz & Clark, is committed to using bankruptcy law as a tool for social justice and was one of the first consumer law firms to join the Law Firm Antiracism Alliance.