Expert: Terry Leeders - 6/13/2007

Question
Hello,

I have a question concerning a situation one of my family members is in. A few years ago she filed Chapter 13 bankruptcy in an effort to restructure and pay off her debts. Unfortunately, she had to retire before her obligations were met, and now lives on social security alone. She spoke with a lawyer about her situation and was informed that if she stopped making payments on the bankruptcy, it would be converted to a Chapter 7. As she was prepared to lose her home anyway, she went with this option. She was able to rework her loan for her auto, and the house has been defaulted and is going to be auctioned. Today, a collection agency called her and attempted to collect a debt for $4000 from a Mastercard. After explaining her situation, the collector informed her she was lying as "he had her paperwork in front of him" and that it "is people like her that make it hard on everyone else". He was repeatedly abusive and brought her to tears. At this point, I want to know what her rights are. It is my understanding that if we serve them with a document to cease this collection, they will no longer legally be able to pursue this. But due to the bankruptcy, do they have legal recourse to do anything drastic such as force her into court or even cause her to receive jail time? She is a 65 year old woman living on Social Security, and I am terribly upset and want to take care of this situation. Any help or advice you could provide me would be greatly appreciated.

brandon

Answer
Brandon,

It is creditors like this that need to be stopped.  Your family member has a potential case against this company.  If I read you correctly, this debt was included in the bankruptcy case and your family member received her discharge after she converted her case to chapter 7. (this is not automatically converted, as her attorney would have to file the conversion papers.)  Assuming that, she would then possibly have a case she could bring in civil court to sue for a violation of the bankruptcy discharge.  (this is not done in bankruptcy court, however.)  She should document full names of everyone she spoke to, keep track of dates and times of the calls.  Also, getting the name of a supervisor would help.  Be sure to get the name of the company as well.    I would recommend she send the creditor the fax of her discharge and schedule F showing that the debt was included.  It might be as easy as that.  Otherwise, she should seek out an attorney to represent her on bringing a suit against these creditors, who have no right to treat her as she has been treated.  There is no debtor prison, and if they did sue her, she could counterclaim them for violation of the bankruptcy discharge as well and seek punitive damages if they had notice of the bankruptcy and chose to willfully ignore it.   I wish her the best of luck.  
Terry Leeders