Can a debt collector try to collect on a debt that was discharged in bankruptcy? | Consumer Financial Protection Bureau (2024)

FAQs

Can a debt collector try to collect on a debt that was discharged in bankruptcy? | Consumer Financial Protection Bureau? ›

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.

Debt collectors cannot try to collect on debts that were discharged in bankruptcy. Also, if you file for bankruptcy, debt collectors are not allowed to continue collection activities while the bankruptcy case is pending in court. If a debt collector calls and you have filed for bankruptcy, tell the debt collector.

One of the most rigorous rules in their favor is the 7-in-7 rule. This rule states that a creditor must not contact the person who owes them money more than seven times within a 7-day period. Also, they must not contact the individual within seven days after engaging in a phone conversation about a particular debt.

According to Section 524 of the U.S. Bankruptcy Code, after you file bankruptcy no one can take action against you if the debt has been discharged. It is illegal for creditors to contact you about payments for the discharged debts.

Debt collectors may not be able to sue you to collect on old (time-barred) debts, but they may still try to collect on those debts. In California, there is generally a four-year limit for filing a lawsuit to collect a debt based on a written agreement.

If a creditor continues to attempt to collect the debt after you receive a 1099-C, the debt may not have been canceled and you may not have income from a canceled debt. Verify your specific situation with the creditor.

How Long Discharged Debts can Appear on Your Credit Report. If you see debts, even marked as empty or discharged, for longer than seven years, you'll need to take measures to have these debts removed or discover who illegally sold your debt to renew and lengthen the time limit.

The Fair Debt Collection Practices Act says debt collectors can't harass, oppress, or abuse you or anyone else they contact. For example, debt collectors can't: Make repeated phone calls that are intended to annoy, abuse, or harass you or any person answering the phone.

If you are struggling with debt and debt collectors, Farmer & Morris Law, PLLC can help. As soon as you use the 11-word phrase “please cease and desist all calls and contact with me immediately” to stop the harassment, call us for a free consultation about what you can do to resolve your debt problems for good.

Can creditors harass you after bankruptcy? ›

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.

An individual receives a discharge for most of his or her debts in a chapter 7 bankruptcy case. A creditor may no longer initiate or continue any legal or other action against the debtor to collect a discharged debt. But not all of an individual's debts are discharged in chapter 7.

Miss just one and your case may be dismissed. The good news is that if you – or the attorney you hire – gets the paperwork right and the case moves through the court to the point where debt discharge is determined, the U.S. Bankruptcy Courts says that 99% of Chapter 7 cases succeed.

If a creditor has written off a loan, normally that means that the loan has been forgiven. In contrast, a “charged off loan” is still collectible.

Debt collectors can restart the clock on old debt if you: Admit the debt is yours. Make a partial payment. Agree to make a payment or accept a settlement.

The following categories of debts are not released on discharge: A debt incurred in respect of, or the payment of which was avoided by, any fraud or fraudulent breach of trust to which the bankrupt was a party (see paragraph 40.178).

If a creditor believes you defrauded them to obtain credit (such as lying about your income or other facts to obtain a loan) or that you used their credit to defraud someone else, they are very likely to object to discharge.

Debts not discharged include debts for alimony and child support, certain taxes, debts for certain educational benefit overpayments or loans made or guaranteed by a governmental unit, debts for willful and malicious injury by the debtor to another entity or to the property of another entity, debts for death or personal ...

A discharge releases a debtor from personal liability of certain debts known as dischargeable debts, and prevents the creditors owed those debts from taking any action against the debtor or the debtor's property to collect the debts.