Can a Creditor Collect After Bankruptcy Discharges?

One of the many common questions asked by clients is, "Can a creditor continue to collect a debt after a successful bankruptcy?" It is not unheard of for a person to receive collection calls or notices after a bankruptcy, and sometimes suddenly years later. It is important to understand how bankruptcies work and your rights.

First, during the bankruptcy process, a creditor must file a proof of claim or interest. This is for both secured and unsecured debts. However, secured creditors have some power. They can request a removal of the automatic stay, or they can file a claim to become part of the reorganization. Regardless, secured creditors do have the ability to repossess or foreclose on the property after the bankruptcy.

Nonetheless, once discharged, there is no real way for a creditor to collect a debt. It does not matter what type of bankruptcy you file. Creditors are legally responsible for filing a claim. This is the only way for them to ensure their payments. Of course, as already stated, secured debts are handled a little bit different.

The Consumer Financial Protection Bureau advises, in answering this very question, "If a debt collector calls, tell the debt collector that you filed for bankruptcy. You should also be sure the debt is in your list of debts and creditors filed with the bankruptcy court. If you are represented by an attorney for your bankruptcy, you should advise the debt collector of this. Then the debt collector must contact the attorney instead of you."

If you have filed a bankruptcy and a creditor continues to collection activity on your discharged debts, they are improperly reporting to credit bureaus, or they sold your account to a debt buyer, you have rights. Start by contacting the creditor or collection agency, and filing a dispute with the credit reporting agency. If that does not work, contact an attorney to enforce your legal rights.

What haven't we covered yet that is important to you? If you would like to talk about if a creditor can collect after a bankruptcy discharge, or need more information, please contact us.