Protecting Your Bankruptcy Discharge
A Word of Warning from the San Jose Bankruptcy Attorneys at the Law Offices of Jon G. Brooks
Watch Out for Unscrupulous Creditors Trying to Illegally Collect Pre-Bankruptcy Debt!A bankruptcy discharge of debt received from a U.S. Bankruptcy Court Judge -- whether in a Chapter 7 case or after finishing a Chapter 13 payment plan -- is a permanent injunction against the debtor’s creditors from ever attempting to collect those debts that existed when the debtor filed bankruptcy. A bankruptcy discharge relieves the debtor of ever having to pay that debt, and it “operates as an injunction against the commencement or continuation of an action, the employment of process, or an act, to collect, recover or offset any such debt as a personal liability of the debtor, whether or not discharge of such debt is waived...” (See Bankruptcy Code Sec. 524(a)(2)) The bankruptcy discharge injunction operates to prevent anyone from ever attempting to collect that debt. Like any court injunction, however, the discharge injunction must be protected and enforced.
In fact, news media reported in late 2007 that not only are major credit card companies stubbornly refusing to report discharged debts to the Credit Reporting Agencies as discharged, but a new "cottage industry" has developed among unscrupulous bill collectors who buy and sell discharged debts in the hope that they may still be able to collect the debt from vulnerable debtors who may not know their rights (see, among others, BusinessWeek.com, "Prisoners of Debt", Nov. 1, 2007, and National Public Radio, Morning Edition, "Discharged Debt Becomes Cottage Industry," Nov. 2, 2007).
If this happens to you, our bankruptcy lawyers can help. If anyone attempts to collect a debt that was finally discharged through a bankruptcy proceeding, the debtor has some very powerful legal tools at her disposal. When a debt collector tries to collect a discharged debt, this activity is clearly a violation of the Bankruptcy Court's discharge order, and any violation of that order is Contempt of Court, and Bankruptcy Law provides for contempt remedies in the form of sanctions against the collector. For one, the discharged debtor does NOT have to pay a Court filing fee to sue the collector. And because the Court is being asked to enforce its own order, U.S. Bankruptcy judges are disposed to grant money sanctions as punishment against bill collectors who violate the Court's discharge injunction.
Unfortunately, you may not even know that your discharged debts are still being reported to the Credit Reporting Agencies as delinquent. Worse, you may be unaware that those very debts are being bought and sold by sleazy collection companies looking to profit from your being unaware of your legal rights.
If you suspect that debt you have had discharged in a bankruptcy is still being reported as delinquent by your former creditors, call us to schedule a free consultation with a bankruptcy lawyer. We can review with you your credit report to verify that your discharged debt correctly shows as having been discharged through bankruptcy. If it is, we can help you force the creditors to tell the truth.
If you are being harassed by unscrupulous bill collectors to pay debt that was discharged in bankruptcy, you have powerful legal rights at your disposal. We can generally sue those collectors without any cost to you, stop the collectors, and in many cases obtain for you money sanctions against the collectors for their contempt of court.
To discuss your Bankruptcy Discharge and to schedule a Free Consultation with an expert bankruptcy attorney in San Jose, call us at 408.286.2766. Prior to our appointment, we ask that you download our Personal Bankruptcy Questionnaire, fill it out to the best of your ability, and bring this information with you to your meeting with us.
We are proud to be a Debt Relief Agency as defined by federal law. We help people get out of debt by filing for relief under the Bankruptcy Code.