Anyone who files for bankruptcy protection expects that the bothersome creditor calls and letters will stop. After all, that is one of the legal protections guaranteed through the automatic stay that comes with all bankruptcy filings. Indeed, most creditors follow the law and cease any further collection efforts. However, there are some who claim to be ignorant of any bankruptcy filings and continue to press debtors into paying up.
Despite the law requiring creditors to refrain from further collection efforts, large banks and big companies that buy packaged debt are infamous for defying federal law when it comes to contacting debtors who have filed for bankruptcy protection. The same could be said for those who pursue debtors who have had their debts discharged. These creditors operate under the assumption that most creditors, especially those for who English is not their native tongue, are not going to complain to authorities about being contacted during an automatic stay. Even worse, some creditors believe that if they call or text enough times, a frustrated debtor will just give in simply to make the calls stop.
It is not uncommon for these types of creditors to be heavily fined for contacting debtors despite bankruptcy protection. Unfortunately, a five-figure monthly fine may not be a strong deterrent for financial institutions that claim to manage billions in assets, but the rights that debtors have under the Fair Debt Collection Practices Act must be upheld. Once a debtor files a bankruptcy petition, the automatic stay (that prohibits any and all collection efforts) takes effect. If a creditor attempts to collect on a debt listed in the debtor’s schedules, the action violates the FDCPA.
Creditors are subject to strict liability under the FDCPA, meaning that a creditor’s ignorance of a bankruptcy filing, or their intent in notifying a debtor about their debt is irrelevant. Moreover, a debtor can seek up to $1000 in statutory damages (as well as attorney’s fees) for each violation. For those debtors who have suffered emotional distress over continuing collection efforts, there are penalties to be paid for this as well.
If you have questions about your legal rights after filing for bankruptcy protection, an experienced attorney can advise you.