Is a Creditor Continuing to Contact You After Bankruptcy?

One of the more common questions bankruptcy filers have about the bankruptcy process may occur long after you have closed your bankruptcy. “What can you do to prevent a creditor from continuing to contact you after bankruptcy?”

This illustration of a creditor calling after a bankruptcy actually occurred and was posted during a discussion on bankruptcy in 2011, “We filed a Chapter 7 bankruptcy in July of 2010, and it was discharged in January 2011. We owned 5 rental properties that we gave up in bankruptcy. The properties were financed by four different mortgage lenders. One of the lenders (names lender here but I removed the name) will not stop calling us since the bankruptcy was discharged…It has been 2 years since we made a payment on that particular house, but they will not leave us alone. They say the calls will keep coming until the house if foreclosed. They have even tried to get me to sell the house for them saying they would give me $2500 to do it. I rejected that idea and we do not want the house… Does the (bank) really have the right to keep calling us after the bankruptcy was final?”

From the sounds of what is going on with this particular discharged debtor, my guess is the mortgage lender may have sold its debt to a junk debt collection agency, a common practice. This would explain the appearance of a major bank illegally contacting you about a debt they know has been discharged through a bankruptcy. Most major banks have legal departments and are smart enough to know better than to harass a debtor after the debt has been discharged. It is illegal for a discharged creditor to contact you once a debt has been discharged through a federal bankruptcy court.

On the other hand, junk debt collections firms often take liberties with the law until they are formally informed to cease their collection actions. If the collection agency feels they can harass you enough to get something out of you, they will stay with you until you formally request they stop. Often, they may not be sure of a bankruptcy filing, and they might rationalize they were not mentioned on the creditor’s list in the beginning even if there was a bankruptcy filed. Because of this, many may erroneously feel the bankruptcy law may not apply to them. They would most likely be wrong to make that assumption.

A major bank takes a huge risk and opens themselves up to a lawsuit for such behavior, and so do the junk debt collection firms that end up with these perceived debts.

Any collection efforts after a bankruptcy discharge, regardless who attempts the action, has a potential risk of violating two aspects of federal law. First, the bankruptcy laws prevent creditors from seeking any further collection efforts on a particular debt once the debt has been discharged. The creditor convicted of violating such is subject to penalties, fees and fines by federal law.

Secondly, if a collection agency has been formally notified in writing to cease and desist from all activities, they also become subject to the Fair Debt and Collection Practices Act. This act also provides penalties and fees for any convicted violations of the federal law.

The debtor in the illustration should either contact their bankruptcy lawyer or the bankruptcy court in which they filed for help in the matter.

 

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