When you file a bankruptcy petition, your creditors receive a notice that you have filed, and when your case is finished, they receive a notice of your discharge, telling them that your case was successful and that you no longer have to pay your debts. However, there are times when you will still hear from your creditors even after your bankruptcy case is closed.
This entry is concerned with the situation where you hear from a creditor that you did list on your petition in bankruptcy and who supposedly received the court’s notices. A recent post dealt with the situation where you may have forgotten a creditor and left them off of your papers entirely. As that post shows, you will still receive a discharge from that debt but you do have to call to let your attorney know about the new creditor.
There can be several reasons why a creditor that was duly listed may still call you after the bankruptcy. Some involve harmless errors and some are quite the opposite. The court’s notice may not have been entered in the creditor’s system properly. Often this can happen because of the volume of notices the creditor receives, or it can happen because a clerk typed your name or social security number incorrectly when the notice was received. It can also happen if they had previously listed you with an incorrect spelling of your name. In these cases, we usually simply give the details of the bankruptcy filing to the creditor and that usually solves the problem.
In the debt collection business, debts are often sold from one creditor to another. For example, when a debt goes bad, a bank may sell the debt for pennies on the dollar to a debt buyer, who will then have the right to collect the full amount. This is perhaps unfair, but legal. Such sales go on all the time, and can possibly happen around the time you file for bankruptcy, and the debt buyer will have no knowledge that you did file because the court’s notice went to the original creditor. In these cases, again, we give the details of the filing to the new creditor and that usually solves the problem.
When creditors, such as those already mentioned, persist in calling after a discharge, or when a creditor who clearly knew about the bankruptcy calls, we often recommend a different course of action rather than being nice about it and just giving out the information. We recommend that the creditor be sued in Bankruptcy Court for violating the automatic stay and the discharge injunction, both of which prohibit them from calling. There are several situations where this may arise, and here are some of then:
Some creditors (and more likely collection agencies) will continue to call even though they have been given the information because they are hoping you will become scared into paying them something. Remember, these people do not make any money for their efforts unless they can get you to send them a payment. So they will continue to call, and if you remind them of your having filed a bankruptcy petition, they will apologize and hang up. They figure you won’t do anything, and they are always hoping someone, somewhere will send them some money. If this is a creditor who called once and was given the information and calls again, or a creditor who clearly received the court’s notice even though this is the first time they called, we recommend suing them.
There are also creditors who will purchase discharged debts for maybe one or two cents on the dollar, figuring that if they call or write, they will receive some payments, and also figuring that even if they are sued, they will collect more than they will have to pay out in damages to those who sue them. For these debt buyers, we recommend suing immediately. It is possible during the lawsuit to figure out that they knew they were buying and suing on discharged debt, and the damages can be increased because of this.
The most important thing to remember is that you never have to pay anything on debts which are discharged in your bankruptcy and you should never be intimidated or scared into paying anything. If you do hear from such creditors, call your attorney and you may actually receive damages for the misdeeds of your creditors.
Allan Bloomfield practices bankruptcy law in Forest Hills, Queens. Contact Allan today for a free consultation.