What to Do If a Debt Collector Is Attempting to Collect a Discharged Debt

Edited by Hannah Locklear

Summary: It is illegal for debt collectors to contact you to collect on a discharged debt. If they try to sue, you should respond to the case and make it clear that the debt has already been discharged. SoloSuit can help you fight debt collectors in and out of court—and win.

Following bankruptcy, consumers often feel relief. Their debts are gone, and they can start from scratch with a blank financial report card.

However, communication can often fall through between consumers and creditors during bankruptcy. Bankruptcy lawyers will notify current creditors of their client’s petition for bankruptcy, but creditors will occasionally have already discharged their client’s debt.

Once a creditor discharges a debt, they’ll sell it to a debt collector, who will begin their collections process. This debt collector may not know that the consumer is going through bankruptcy or has completed it.

As such, debt collectors may often attempt to collect debts discharged in bankruptcy. Understanding what to do if a collection agency contacts you after your bankruptcy is critical.

Why is a debt collector contacting me about a discharged debt?

In most cases, debt collectors attempt to collect discharged debts because they aren’t aware you’ve declared bankruptcy. The information may be too new to show up in their records, and they’re simply contacting people they believe owe money.

If you receive a call from a debt collector trying to get money from you, inform them of the situation. Explain that you’ve declared bankruptcy, and a court discharged your debts.

The collection agent may request information about your bankruptcy, like the case number and the discharge date. If you have the details available, give them to the creditor. If you don’t, you can refer them to your bankruptcy attorney.

What if the debt collector won’t stop contacting me?

If you’ve politely given the debt collector the information they need to update their records and they still contact you, they’re in violation of the Bankruptcy Protection Act. Prior creditors cannot contact consumers concerning discharged debts via any communication, including letters, emails, or phone calls.

Debt collectors are also forbidden from legal attempts to collect discharged debts, like garnishing your wages, freezing your bank account, or pursuing a warrant in debt against you. If a debt collector takes legal action to collect a discharged debt, they may be subject to fines and penalties, and you can file your own lawsuit against them.

Document collection attempts from debt collectors

It’s a good idea to document all collection attempts from debt collectors, especially after you declare bankruptcy. Keep any letters you receive and make a note of any calls from collection agents.

All communication from debt collectors and creditors should cease dramatically after you declare bankruptcy. You may hear from debt collectors a handful of times, but that should stop once you inform them of the debt discharge.

You should provide your lawyer with a list of creditors who continue contacting you. Your lawyer can call them and inform them of your bankruptcy and the details concerning the discharge date. Your attorney’s call should stop future communications from debt collectors.

What if a debt collector tells me I owe the debt even though I included the account in my bankruptcy?

Debt collectors are known for using all types of tactics to convince consumers they owe money. Telling you that you owe a debt discharged in bankruptcy is not only wrong but also illegal. Ask the debt collector for their license number and file a complaint with the Better Business Bureau (BBB) and the Consumer Financial Protection Bureau (CFPB).

You should also report the debt collector to your bankruptcy attorney. Your attorney can send a cease and desist letter notifying them to stop all contact with you. Your attorney can also threaten the debt collector with a lawsuit if they continue to hound you.

Do I still owe a debt I didn’t include in my Chapter 7 bankruptcy?

If you declared Chapter 7 bankruptcy and forgot to include a dischargeable debt, you should no longer owe it, even if you didn’t have it in your debt list.

However, if your Chapter 7 bankruptcy case is considered an asset case — where the trustee of your property sold it and distributed the proceeds among your creditors — you may still owe the debt.

Most Chapter 7 bankruptcies are no-asset cases. In a no-asset case, you don’t own any property with significant value to pay your creditors, so there’s nothing for the trustee to distribute. A Chapter 7 bankruptcy discharges most debts, and if you forgot to include one on your list, there’s nothing the creditor can do to collect the money.

Do I still owe a debt I didn’t include in my Chapter 13 bankruptcy?

If you failed to include a debt in your Chapter 13 bankruptcy, you still owe it.

Chapter 7 bankruptcy is different from Chapter 13. In a Chapter 7 bankruptcy, the court eliminates most debts. A Chapter 13 bankruptcy requires you to reach an agreement with your creditors, allowing you to make monthly payments for a specific period (usually three to five years) before the remaining balance discharges.

Debts you forget to include in a Chapter 13 bankruptcy aren’t in the repayment agreement with your creditors. Therefore, you must still repay them. You’ll need to attempt to come to a payment arrangement independently with the creditor or pay off the debt altogether.

Some debts cannot be discharged through bankruptcy

Certain debts are almost never dischargeable through bankruptcy. They include:

• Court fines or penalties from a personal injury case or criminal matter
• Alimony and child support payments
• Debts from fraud or embezzlement
• Tax debts less than three years old
• Student loans

In some cases, it may be possible to eliminate student loan debt through bankruptcy. You’ll need to file a particular type of claim in addition to the bankruptcy lawsuit, known as an adversary proceeding. You’ll need to prove that repaying the loans causes you undue financial hardship, which involves meeting various requirements.

If you receive collection calls relating to any of these types of debts, they are valid. You still owe the debt, and the collection agency can continue to pursue you until you agree to a repayment plan or pay the debt in full.

How can I ensure that I include all of my debts in my bankruptcy case?

For maximum protection, it’s best to be extremely careful when filling out your debt list for your bankruptcy. Get a copy of your credit report and list all of your creditors and current obligations with them. You should also consider debts that might not be on your credit card report, like payday loans or medical debts.

While leaving debt off your list in a Chapter 7 bankruptcy usually won’t hurt you, you will be responsible for unlisted obligations in Chapter 13 bankruptcy. Like any other legal proceeding, you’ll want to ensure that everything in your bankruptcy petition is accurate.

Fight debt collectors in court

If you’re being sued by a debt collector over a discharged debt, you should respond to the case to make sure you don’t automatically lose.

In your Answer, deny all of the claims against you and assert your affirmative defenses, including the fact that the debt has already been discharged through the process of bankruptcy.

SoloSuit can help you respond to a debt lawsuit in minutes online. Our Answer form is customizable and includes all the legal wording and formatting you need to defend yourself and ensure the case gets dismissed.

Watch this video to learn more:

What is SoloSuit?

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You can use SoloSuit to respond to a debt lawsuit, to send letters to collectors, and even to settle a debt.

SoloSuit's Answer service is a step-by-step web-app that asks you all the necessary questions to complete your Answer. Upon completion, we'll have an attorney review your document and we'll file it for you.

>>Read the FastCompany article: Debt Lawsuits Are Complicated: This Website Makes Them Simpler To Navigate

>>Read the NPR story on SoloSuit. (We can help you in all 50 states.)

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