When you file bankruptcy, your creditors are required to leave you alone.
Section 362 of the bankruptcy law automatically tells them to stop any action or act to collect a debt from you. They can’t call, they can’t send bills, they can’t take you to court.
But what if they don’t stop? Should we remind them nicely? Or just sue?
Here are the rules I worked out after handling twelve thousand bankruptcy cases.
First, we give everyone a pass for the first two weeks. It takes a while for the court to send them a notice of the bankruptcy, for the post office to deliver it, and for them to update their records. Two weeks seems fair for all that.
Second, we only sue if you are mad. Suppose they call, and you tell them to stop; and they stop. If your feeling is “no harm, no foul,” then that’s fine. If you are upset or angry–maybe based on your history with this same creditor–then I’m upset, too.
Third, we give the benefit of the doubt to small outfits, especially doctors. If a doctor’s office keeps billing you, they should get two warnings before we bring them in front of a judge. Maybe they are doing it on purpose, but I believe in giving a break to little guys.
Fourth, we’ll forgive one honest mistake. Let’s say American Express calls and demands payment three weeks into the bankruptcy. You tell them to stop and they stop. Maybe they lost the notice the court sent them about you. They probably get a thousand bankruptcy notices–every day! A handful of those get lost in the mail; and another handful might get lost in shuffle. We all make mistakes.
Fifth, we get mad when people lie to you. Instead of saying, oops, sorry our mistake, sometimes they come out with a lie.
Here are some lies we’ve heard in the last few months.
“Your lawyer filed the wrong kind of bankruptcy.”
“Bankruptcy doesn’t cover interest on this debt.”
“You filed personal bankruptcy and this is a business debt.”
If they try to hand you a line, we go after them. We sue every time. We want it to be expensive for companies who train their collection departments to be quick with a lie.
Sixth, we always go after debt collectors. Not the original creditor, now, but debt collectors like NCO, LVNV, Midland, or Zwicker. Why?
Because of the Fair Debt Collection Practices Act. Collectors had a history of being bad, so in 1978 Congress put them under a double check requirement. In order to excuse a mistake, they first have to show it was an honest mistake; then they have to show they specifically tried to prevent that exact mistake.
So, first they have to show they honestly didn’t get the notice from the bankruptcy court. Second, they have to show that they ran their own double check anyway to see if you filed bankruptcy before they called you.
Of course, they never really do that. So we always sue.
Finally, we always sue people who don’t deserve the benefit of the doubt.
There’s one giant credit union based in Northern Virginia that never gets the benefit of the doubt from me. Before bankruptcy, they skate right up to the edge of the law, and get away with it.
Code of Virginia § 18.2-429 makes it a class 3 misdemeanor to cause someone’s phone to ring with the “intent to annoy.” This credit union calls people with the intent to annoy.
If your ex called you four or five times a day after you told them not to call, he (or she) would get prosecuted. This credit union is not going to get prosecuted–even though they do the same thing.
But once the bankruptcy is in place, I go after them for the slightest slip-up. Every time. They don’t act like a respectable business; I don’t treat them like one.
PS Click here for our litigation intake form if you are one of my bankruptcy clients, and a creditor is still harassing you. Get us the info, so we can get after them right away.