Creditors Still Try to Collect During Bankruptcy

Even after filing bankruptcy, some creditors still try to collect. However, debtors still have rights. Learn more in the following article.

2012-07-04

July 04, 2012 (Press-News.org) Creditors Still Try to Collect During Bankruptcy

The automatic stay is a fundamental part of the bankruptcy process. It is essentially a grace period granted to debtors who have filed for bankruptcy protection that prevents creditors contacting them or collecting on any debts listed in the petition. The stay goes into effect immediately upon the filing of a bankruptcy petition, and generally continues until the court orders a discharge.

Once a discharge is granted, a debtor's legal obligation to pay most debt is extinguished. Unfortunately, this does not stop some creditors from continuing to pursue past debt because they often earn money on discharged debt. According to a recent Huffington Post report, debt collector Portfolio Recovery has earned more than $79,000 in fees in 2012 collecting on bankruptcy debt. Capital One had collected more than $2 million from 15,550 accounts discharged in bankruptcy before a court forced it to refund the money.

More importantly, the civil penalties levied under the Fair Debt Collection Practices Act (FDCPA) often dwarf the amounts creditors end up collecting from unwitting consumers. Nevertheless, consumers should be vigilant about collection actions on discharged debt. The following tips can help in protecting against illegal collection actions:
-Keep a detailed log of any communications made by creditors after your bankruptcy petition has been filed, including the date, time and substance of any phone calls, voicemails, letters and bills sent to you.

-Check your credit report 60 days after you receive a bankruptcy discharge and dispute any account that does not reflect that the debt has been discharged or reduced to a zero balance.

-Lastly, do not be intimidated into paying on any debt listed in a bankruptcy. The bankruptcy court can award money damages and attorney's fees for "willful" violations of the automatic stay or collection actions on discharged debt. Willful violations do not require a specific intent to violate the law. The creditor must only know that you had filed bankruptcy and listed their debt in your petition.

The preceding is not intended to be legal advice. If you have questions about collection actions during the automatic stay or after a discharge, consult a bankruptcy attorney.

Article provided by Heller & Richmond, Ltd.
Visit us at www.affordablebankruptcychicago.com/

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