Of course the answer is yes, absolutely, by federal law. However, some questionable practices exist among banks and collection agencies which, according to lawsuits filed about the country, prey on those who do not know their rights.
If your debts were discharged in bankruptcy, and a creditor, be it the same lender, bank, or credit card, or a new one, attempts to collect a debt that you know to be discharged, contact your attorney immediately. There could be a bankruptcy fraud violation there.
Bankruptcy Debt Sold Notwithstanding Discharge
When a client calls us and reports that a bank or collection agency is continuing to attempt to collect a debt even, after we achieved a discharge for them, we send a notice to the creditor that it is in violation of the Fair Debt Collection Act. However, we don’t have the resources to see if this is a pattern by that bank or collection agency.
The United States Justice Department Trustee Program is investigating JPMorgan Chase, the Bank of America, Citigroup, and Synchrony Financial (formally GE Capital) for attempting to collect discharged debts in violation of federal law. Of course the banks have denied this practice and we can expect a serious litigation defense.
A federal bankruptcy judge in White Plains (Westchester County), New York found that there is a conspiracy of sorts between the banks and the debt buyers, because victims of this practice will pay up, rather than risk losing credit score points. This is especially true for folks who have finally received a fresh start and are ready to make a financial move such as buying a car or a house. The bankruptcy discharge is worthless if the banks find subversive ways to attempt to continue collecting on the debt.
Judge Drain, the New York judge with several of these cases on his docket, recently refused to dismiss a case that was brought on behalf of post-bankruptcy victims. He indicated that he would refer the matter for criminal prosecution if there was a finding that the bank intentionally violated the laws. And, he found a reason for the possible violation – the banks retaining an interest in collection of the debt, notwithstanding selling the debt to collection agencies. Discovery in these lawsuits are seeing that the banks are selling discharged debt and giving the buyers an incentive to collect.
Clerical Mistakes of Intent by the Banks?
We don’t know, but the investigation by the United States Trustee Office may uncover some critical facts. Initial investigation has uncovered clear violations which fit the pattern alleged by the US Trustees.
Further, experienced bankruptcy lawyers are filing class action lawsuits alleging the practice. Discovery in those cases could help determine that there are violations. We don’t know of any class action certification, that is, court certification of a class against a bank, however, the lawsuits have been filed and discovery is ongoing.
Hire An Experienced Bankruptcy Lawyer
If you have debt collectors after you, you may be eligible for personal bankruptcy. It the debt has already been discharged, call us too. Attorney Neil Burns has 29 years of experience in representing people who need a “fresh start” and a personal bankruptcy. The initial consultation is free. Call 617-227-6423.