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Dealing with debt collectors

When you are officially discharged from Chapter 7 or Chapter 13 bankruptcy in New York, you have every right to assume that you’ve gotten a fresh start financially. Therefore, it can come as a shock when a debt collector calls -again and again- about a debt that was included in your bankruptcy filing.

With few exceptions, entering a discharge in a personal bankruptcy case means that all debts included with the filing can no longer be legally collected. If a creditor received notice of your filing and still tries to make you pay what you originally owed, then they have essentially violated a federal court injunction and can be harshly penalized. They know this, so the chances are that the collector is not acting on behalf of your original creditor.

Junk Debt Buyers

In most instances, those collectors who call about a discharged debt actually purchased it from your creditor and didn’t know that you filed for bankruptcy. This practice, called ‘junk debt’ buying, is when creditors sell debts they can’t collect on to debt buyers, who pay pennies on the dollar and try to realize a windfall by collecting the full amount.

If this happens to you, then don’t panic. You are under no circumstances obligated to pay a discharged debt. Instead, do the following:

  • Identify the original creditor, which should be listed in the collection letter
  • Send the collector a copy of your discharge order and a copy of the schedule that lists the creditor
  • Use a delivery method that provides proof that the collector got your information
  • Keep a copy of your letter to the collector

Most debt collectors should stop upon receipt of these details. If they don’t, then it’s time to call a lawyer, because they have now willfully broken the law.

The Fair Debt Collection Practices Act

The Fair Debt Collection Practices Act (FDCPA) was passed by Congress in 1977 after complaints about predatory debt collectors reached an all-time high. Under the FDCPA, it is illegal to use deceptive and unethical debt collection practices like the following:

  • Swearing and yelling at you
  • Telling you that you can be arrested if the debt is not paid immediately and in full
  • Persisting in collecting a debt that is disputed or discharged in a bankruptcy
  • Calling all hours of the day and night

If a debt collector persists in trying to make you pay a discharged debt, then they can potentially be found guilty of the following FDCPA violations:

  • Directly contacting someone who is represented by an attorney with respect to that debt (in this instance, your bankruptcy attorney)
  • Misrepresenting the character, nature, and legal status of the debt (by insisting that it is collectible despite the discharge)
  • Threatening actions they cannot legally take (if they threaten to sue you)

If you sue the collector and win, then you can recover statutory damages of $1000 per FDCPA violation plus attorney’s fees, court costs, and any actual damages. It is worth noting that the FDCPA does not apply to original creditors, but if it is the creditor who harasses you, there are state laws that place similar restrictions on them.

If you are being pursued for a discharged debt, then contact a New York attorney who can help you assert your rights in court and even force the debt collector to pay you instead. If you are considering filing for a personal bankruptcy as well, then contact the law offices of Jayson Lutzky, P.C. Mr. Lutzky offers free in-person consultations. His office is conveniently-located on block from the 4-train’s 183rd Street stop in the Bronx. Call 713-329-9500 to set up an appointment and visit www.MyNewYorkCityLawyer.com to learn more today.

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