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Can A Creditor Sue After Bankruptcy

I Who Is The Employer Of The Collector Calling Demanding Payment Of An Unpaid Account

Filing A Chapter 7 Bankruptcy Case – Can A Creditor Sue You After?

The answer to this question can often be straightforward.; In some instances, however, the answer can be quite complex.

Your unpaid account may be owned by either your original creditor or it may be owned by a debt buyer.; Your original creditor is the company that provided you with goods, services, or credit.; Some original creditors will sell their portfolio of unpaid accounts to another firm.; These purchasers of unpaid accounts are known as debt buyers.

To make matters more complicated, there are two distinct categories of debt buyers.; Traditional collection agencies will purchase debt.; As far as traditional collection agencies are concerned, their primary revenue source is collecting debts owed to others on a commission basis, and collecting accounts it owns is a secondary source of revenue.; The second category of debt buyer is the pure debt buyer.; The pure debt buyer does not collect accounts owed to others on a commission basis.

Some original creditors never sell their unpaid accounts to debt buyers.; There are a handful of Canadian firms that sell their unpaid accounts when they have been unpaid for as little as six months.; It is more common, however, for Canadian firms to sell their portfolio of bad debts when the date of last payment is at least two to six years in the past.

Bankruptcy Stops Most Lawsuits

When someone files a bankruptcy case, a court order called the automatic stay immediately goes into effect. The stay stops a creditor’s attempt to collect a debt from the debtor.

For instance, a creditor must stop calling the debtor, as well as sending bills. The stay’s power includes stopping many types of lawsuits cold.

But the automatic stay has limitations. It only ends litigation involving debts that can be forgiven in the bankruptcy case. Other types of court proceedings can continue to move forward.

When Creditors Can Still Chase You

  • secured debts, such as a mortgage or charging order on property
  • magistrates court fines
  • social fund loans
  • student loans
  • any payments a court has ordered you to make under a confiscation order, for example for drug trafficking
  • rent arrears – your landlord can’t force you to pay these, but if you don’t they may be able to evict you

If creditors are contacting you about any of these debts and you want to come to a payment arrangement, you’ll need to respond to them and try to make an agreement for paying what you owe.

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What Can I Do If Im Harassed About A Debt During Or After Bankruptcy

When you file bankruptcy, two of the primary things that you are seeking are the automatic stay and discharge. The automatic stay prevents creditors from contacting you or taking action to collect the debts you owe , while the discharge relieves you of the obligation to repay many of your debts. Although creditors normally respect both, there are times when some may intentionally or unintentionally violate the stay or discharge. If this happens, it is important for you to know of your legal rights.

Stay violations

The automatic stay goes into effect as soon as you file either Chapter 7 or Chapter 13 bankruptcy. After this point, it is illegal for creditors to do anything to collect the debt or contact you about it. If a secured creditor violates the stay by taking back the collateral that secures the debt , you have the right to ask the bankruptcy court to compel the creditor to return the property to you.

Regardless of whether the creditor is secured or unsecured , you also have the right to seek damages for stay violations. If the creditor knew or should have known that the stay was in effect when the violation occurred, the court may award you any actual damages you suffered because of the violation and attorneys fees. In cases where the creditors actions in violating the stay were extreme, you may also recover punitive damages and compensation for emotional distress.

Discharge violations

Speak with an attorney

Collection Accounts And Lawsuits

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Debt collectors eventually turn up the heat. A credit card company and any debt collector it uses will continue to attempt to collect an unpaid credit card debt exclusively through contacting you by phone, mail, and even email, but only for a limited time. At some point, whether based on a set internal time frame for filing a debt collection lawsuit, just believing that you arenât going to pay the debt, or finally filing suit just before the statute of limitation expires, the creditor will take action and file a collection lawsuit against you in your local court.

You sign a contract promising to repay the debt and open an account when you get a credit card. A collection lawsuit involves the credit card company, as plaintiff, filing a suit against you, the defendant, for breach of contract, and on an open account. It files a complaint that you must answer within a certain time frame, usually 20 days. In addition to requesting the amount of the debt, the complaint will request interest on the debt, attorney fees, and court costs.

Once you are served with the complaint, as a defendant, you must file an answer that acts as a response to the complaint filed by the credit card company. An answer contains replies to each numerically-listed claim on the complaint. The reply admits, denies, or asserts a defense paragraph-by-paragraph to the complaint.

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Keeping Property After Bankruptcy

Even your car and your house loans will be discharged in a Chapter 7 case, but your creditor will still have a right to take and sell your collateral. If you want to keep the property that secures a loan, youll have to continue paying for it until the loan is paid in full, even after your bankruptcy case is over.

You will probably enter into a reaffirmation agreement in which you and the creditor agree that the loan will not be discharged, and you will continue to be liable for the debt. If you later default, the creditor will have at its disposal the full range of collection actions, just as if the debt were never a part of the bankruptcy case.;

Enlist The Judges Help

If the collector;persists, you can ask the bankruptcy judge for help. ;After all, its the judges order thats being ignored.

Most judges dont care for that.

Contact your bankruptcy attorney for help enforcing the discharge. Youll have to file a motion for sanctions for violation of the discharge and serve it on the bad acting creditor.

The Bankruptcy Code allows the judge to award you the attorneys fees and damages or sanctions that you incur in enforcing the discharge.

If the debt buyer had no reason to know about the discharge, you may have a violation of the Fair Debt Collection Practices Act. ;A wider range of damages may be available to you as a result.

Bankruptcy attorneys are becoming more active in court room attempts to get the debtor the peace that the discharge is supposed to provide. Judges are expected to order the creditor to pay the debtors attorneys fees incurred in enforcing the discharge.

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Why Collectors Still Call After Your Bankruptcy Discharge

Some may honestly not know that either you went through bankruptcy or what it means to have a debt discharged. For these creditors, a simple telephone call or letter from you or your attorney will usually stop their collection activity. If the action of one of these creditors is relatively minor for example, a telephone call or letter seeking payment of the debt and they immediately stop their collection efforts when informed of the bankruptcy, then as they say in the sporting universe, no harm, no foul.

For others, however, it isnt as simple. There are some creditors who may take your bankruptcy personally and persist in trying to collect on a discharged debt. Worse than these, however, are the debt buyers who know they are breaking the law and figure that the majority of people wont put up a fight. They purchase old and/or discharged debt for pennies on the dollar and if only a portion of the people they contact pay them, they will make a profit.

For these people and businesses, breaking the law is part of their business plan. Thats the bad news. The good news is that you can successfully fight back and not pay them your hard-earned money.

Iii What Is A Collection Agency

Can I Still File For Bankruptcy After A Creditor Sues Me?

Your creditorregardless of whether your debt is owned by your original creditor or a debt buyermay decide to hire a collection agent to collect your unpaid account.; A collection agent is a firm authorized by a creditor to collect monies owing to the creditor.; There are two types of collection agents, collection agencies and collection lawyers.; Over ninety-five percent of all the collection agent work in Canada is carried out by collection agencies.

Collection agencies communicate with those owing moniesin writing and via telephonedemanding payment on behalf of their creditor-clients.; The flashpoint for unpleasant interactions between bill collectors and consumers arise where collectors are phoning a consumer at home or at their workplace.

Collection agencies are firms that are not only licensed in each province and territory where they make collection calls but also they are subject to a code of conduct that imposes certain duties upon them and prohibits certain conduct.; Canada has a total of 10 provinces and three territories and the code of conduct imposed on collection agencies varies tremendously from one province to the next.

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Debts That Are Difficult To Discharge In Bankruptcy

Student loans are notoriously difficult to discharge through bankruptcy; it is only possible if you can demonstrate undue hardship to yourself or your dependents, such as being unable to maintain a minimal standard of living. In some cases, a court may discharge part, but not all, of your student loan debt. If student loan debt is a major reason for your considering bankruptcy, contact your loan servicer first and see if itâs possible to negotiate a repayment plan that would work for you. In the case of federal student loans, for example, several repayment plans are available.

You cannot have income tax debts discharged without a special exemption, which can only be obtained by petitioning the bankruptcy court and explaining why you deserve relief. So if you have income tax debts that you cannot repay, then you may be better off consulting with a tax attorney to discuss your options before filing for bankruptcy.

In the case of federal taxes, for example, the Internal Revenue Service can offer several alternatives to people who are unable to pay what they owe. One is an offer in compromise, in which the IRS agrees to accept a lesser amount. The IRS may also arrange for a payment plan, or an installment agreement, that will allow you to pay your taxes over an extended period of time.

What To Know About Old Debts

What if my debt is old?

Debt doesnt usually go away, but debt collectors do have a limited amount of time to sue you to collect on a debt. This time period is called the statute of limitations, and it usually starts when you miss a payment on a debt. After the statute of limitations runs out, your unpaid debt is considered to be time-barred.

If a debt is time-barred, a debt collector can no longer sue you to collect it. In fact, its against the law for a debt collector to sue you for not paying a debt thats time-barred. If you do get sued for a time-barred debt, tell the judge that the statute of limitations has run out.

How long the statute of limitations lasts depends on what kind of debt it is and the law in your state or the state specified in your credit contract or agreement creating the debt.

Also, under the laws of some states, if you make a payment or even acknowledge in writing that you owe the debt, the clock resets and a new statute of limitations period begins. In that case, your debt isnt time-barred anymore.

Can a debt collector contact me about a time-barred debt?

Sometimes. It depends on which state you live in. Some state laws say its illegal for a debt collector to contact you about a time-barred debt. But even if you live in a state where a collector may still contact you, they cannot sue or threaten to sue you over a time-barred debt.

What if Im not sure if my debt is time-barred?

Does a time-barred debt stay on my credit report?

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What Can I Do To Prevent Further Collections After Debt Settlement

If creditors or debt collectors have agreed to a settlement, there are a few things you can do to help prevent them from coming after you again. Most of this involves keeping accurate and complete records and carefully making your final payments; the way in which you make your final payments is also important.

Here are some things that you should and shouldnt do:

How To Be Included As A Creditor On A Bankruptcy

Can Creditors Sue You After You Have Filed for Bankruptcy ...

If the person who owes you money hasnt included the debt they owe you on their bankruptcy, you can add the debt yourself.

To add your debt to an existing bankruptcy, you will need:

  • AFSA administration number, and

If you don’t have these details, you may wish to complete a Bankruptcy Register Search.

If the trustee is the Official Trustee; complete the online form to:

  • add a debt

Most types of unsecured debts are covered by bankruptcy, including:

  • trade debts
  • employee wages.

For more information on unsecured debts and whether they are provable and/or extinguished see;.

As a creditor, this means:

  • You are not able to demand payment of the debt from the person.
  • You may be eligible to receive payments from the trustee, if available.
  • Most of these debts are released after the bankruptcy ends.
  • You will need to contact the trustee of the bankruptcy for any updates or further information.

If you’re listed as a creditor, the trustee will notify you. Ensure the trustee has your correct details so they can inform you of available payments.

If youre not sure if you are a listed creditor on the bankruptcy, contact the trustee or use our online form to add a debt to a bankruptcy.

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Attempts To Collect Debt After Bankruptcy

All bankruptcies involve automatic stays that go into effect immediately after the bankruptcy is filed. Automatic stays are intended to stop creditors from attempting to collect on a debt that may be discharged during the bankruptcy. This does not mean that you cannot be sued. It only means that in order to do it, the person filing the lawsuit must have permission from the court. For example, a judge may grant a person permission to file a divorce lawsuit or a child custody lawsuit against you while your bankruptcy case is proceeding. Typically, as long as the lawsuit does not involve any debt, a judge will allow the lawsuit to proceed.

Can A Collection Agency Take My House

If they have been successful in getting a judgment against you, a creditor or collection agency can file the judgment in the local Land Titles office against your home or other real property. This process is also known as registering a lien. If you do not pay the judgment, they can eventually obtain a court order to sell the real property.

Within provincial regulations, certain creditors like banks and finance companies can seize property on which they hold a defaulted mortgage, without a court process. Canada Revenue Agency can also apply a lien against your property for unpaid taxes, without a court process.

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What Is A Discharge In Bankruptcy

A bankruptcy discharge releases the debtor from personal liability for certain specified types of debts. In other words, the debtor is no longer legally required to pay any debts that are discharged. The discharge is a permanent order prohibiting the creditors of the debtor from taking any form of collection action on discharged debts, including legal action and communications with the debtor, such as telephone calls, letters, and personal contacts.

Although a debtor is not personally liable for discharged debts, a valid lien that has not been avoided in the bankruptcy case will remain after the bankruptcy case. Therefore, a secured creditor may enforce the lien to recover the property secured by the lien.

What About My Credit Report

Filing A Chapter 7 Bankruptcy Case – Can A Creditor Sue You After? MUST SEE!

After you get your order of discharge, the court clerk mails a copy of the order to all creditors listed in your bankruptcy paperwork. This is their notice of the discharge. They are obligated to follow the courtâs injunction order if the debt was discharged. The creditors must report accurate information to the credit reporting bureaus, abiding by the regulations under the Fair Credit Reporting Act . This doesnât always happen. Each discharged account should have a zero-dollar balance and show that the account was discharged in bankruptcy. If you signed a reaffirmation agreement, that should be noted on your credit report.

Credit reporting agencies and account creditors are required to report the information. You can get a free copy of your credit report and check for inaccuracies. Inaccurate reporting could be a violation of the discharge.

Check your credit report for the following after bankruptcy discharge:

  • A balance other than $0.00 for unsecured discharged debt

  • An inaccurate balance for secured debt

  • Inaccurate balance after signing a reaffirmation agreement

  • No mention of a bankruptcy discharge

  • A âcharge offâ instead of a discharge

  • Hard pulls on your credit report

Itâs a good idea to talk to a bankruptcy attorney about a violation to discuss legal action and to see what steps you can take to repair your credit report.

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