Creditor Misbehavior is the Debtor’s Friend

I have had a rash of clients complaining that, even after we file their case, they are continually harrassed and pestered by creditors.  Obviously that is very much “uncool”.  Why does this happen and what can you do if it does?  The second part of that question is easily answered – CALL YOUR BANKRUPTCY LAWYER IMMEDIATELY.

The other part, why does it happen, is something that I have no idea about.  There are companies out there that will buy discharged debt and try to revive it by grabbing a payment.  There are other firms that will buy debt or have it transferred to them in a Chapter 13 case under what are called “forward-flow” agreements.  The terms of most of these agreements are kept highly secret.  What ends up happening, though, from the perspective of the bankruptcy client is …. they get pestered and harrassed.  Some original creditors, or at least their billings and internal collections departments, feel that the law does not apply to them and if they are persistent enough they will get paid.  THAT IS NOT THE WAY IT SHOULD BE.

The bankruptcy code and other law provide strong remedies for overly enthusiastic creditors – they can be sued or moved against for violating the automatic stay, which protects against collection efforts while a bankruptcy case is pending or a chapter 13 case is in the midst of plan payments.  They can, after discharge, be sued under either the FDCPA or brought back to bankruptcy court for a discharge violation.  The only way this can happen, however, is if the debtor calls either the lawyer who filed the case or one who will handle the violation. The violating creditor may well be subject to financial penalties for their misbehavior.