Bankruptcy puts an immediate stop to any collection actions by creditors or third-party collection agencies. This means after any debtor files Chapter 7 or Chapter 13 bankruptcy, creditors must stop all harassing phone calls, letters, e-mails and any legal action they may have initiated.
A bankruptcy judge in Florida is making the message to big banks and lenders clear: when your debtor files bankruptcy, stop trying to collect or you are going to pay. In a recent case, a debtor filed bankruptcy as well as a debtor's discharge, which offers a grace period while the debtor organizes finances.
After this debtor filed for bankruptcy protection, Bank of America, like many banks do, ignored the discharge and proceeded to call the debtor 38 times to demand the outstanding payments. The court has now ordered that Bank of America pay $12,500 for attorney's fees and damages for emotional stress to the debtor. Debtors in Tennessee and nationwide can benefit from this outcome.
Bank of America has a longstanding record of mistreating debtors, including sending their information to outside collection agencies, even after the debtors filed bankruptcy. A previous case found that Bank of America sold the debts to an outside collection agency, which harassed a woman for three years, even after her account had been settled. As this case reminds big banks, these actions are illegal.
The Fair Debt Collection Practices Act was intended to eliminate abusive collection practices and to gives consumers remedies for any violations. Individuals and businesses can put an immediate stop to creditor harassment by filing bankruptcy. Like in this case, additional compensation may be available for illegal collection action taken after filing.
Source: The Huffington Post, "BofA Allegedly Called Debtor 38 Times After He Filed for Bankruptcy," Alexander Eichler, March 30, 2012.