When you receive your bankruptcy discharge, you are legally excused from responsibility for any debts that have been discharged.
Unfortunately, some unscrupulous creditors count on people filing bankruptcy not knowing how far their protection extends and attempt to collect on debts after the court has excused them.
Don’t Pay What You Don’t Owe
The fresh start granted to you by the court protects you from the following.
- Mail contact from creditors: Letters indicating that payment is due are prohibited; if you receive any, show them to your attorney.
- Phone calls from creditors: Again, you have no obligation to pay discharged debts. Contact from creditors asking you to do so is forbidden. Record the time and date of any such calls.
- Lawsuits from creditors: Because you no longer owe money on discharged debts, creditors have no legal recourse to collect them.
- Failure to update your credit report: Creditors that threaten to continue reporting a discharged debt as unpaid to scare you into paying it are breaking the law. Be sure to check your credit report for accuracy and note any wrong information you see.
Why Creditors Attempt Collection
Put simply, creditors stand to make money by attempting to collect on debts you don’t owe.
If you pay them, they get cash they otherwise wouldn’t have.
In some cases, the people or groups attempting to collect aren’t even your original creditors! Here’s why:
- Say you owed one credit card company $1,000, but the debt was discharged in bankruptcy. You now owe the company $0, which is how much they can legally collect from you.
- A third party collector may offer to buy your debt from the credit card company for, say, $10 for the privilege of “owning” the discharged debt. The credit card company may agree, since $10 is more than $0, so they technically make a profit.
- The collector can then hound you about paying the debt, even though you no longer have any legal obligation to do so. If you end up paying, they make $990. If not, they only lose $10.
- Because enough bankruptcy filers are unaware that they don’t have to pay these debts (or feel somehow guilty about not having paid them), many pay. This makes the illegal debt collection profitable even when some people refuse to pay.
Contact a Bankruptcy Lawyer
If any of your creditors tries to collect on this “zombie debt,” you have the right to contact a bankruptcy lawyer.
You have rights and can take action to protect them – that’s what the fresh start is all about!
Tags: bankruptcy discharge, bankruptcy lawyer, creditors, debt, filing bankruptcy
This entry was posted on Thursday, April 9th, 2009 at 11:53 am and is filed under Post-Bankruptcy Debtor Education. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
I have had this happen to me before. Even when you tell them it is against the law they still call. =(
I filed bankruptcy last June. Discharged in September. I continue to get bills from one creditor, and in fact I believe he has turned me over to a collection agency and turned the debt into the credit report agencies. I filed because I am broke. I can’t afford a lawyer. Is there a way to force him to leave me alone. I tuend him in to BBB. I am trying to find ways to make this guy suffer for what he is doing.
Apishapa- DONT Pay anything- file complaints with the FTC/State Attorney General/and the financial licsensing board in your state-you can find via searching “your state” Goverment offices- many can be filed online- get the collection agencies address as well as the original creditor-send via certified mail a copy of your bankruptcy papers to cover your butt-in this letter-ask them to cease and desist due to a bankruptcy discharge-if they dont stop then, you take your paper trail and file a civil suit-you dont need a lawyer to do this-contact your local attorney gen. for instruction-dont give up and save all records of every call, contact and letter.