What Is Life Like After Bankruptcy?
Protecting Yourself From Zombie Creditors
You fought to get your Discharge in Bankruptcy to obtain your goal of a bright financial future. But what if creditors are still coming after you? Did you know that can happen?
So here is the scenario… you get your Bankruptcy Discharge and go on your way of living your best life and all of the sudden the Sheriff is at your door handing you a Petition trying to collect on a debt. The only problem is, you don’t have any idea who this creditor even is. Now what?
It is a pretty common practice for creditors to sell their bad, uncollected, debt to another creditor for pennies on the dollar. These new creditors are known as Zombie Creditors. Now this new creditor can try to collect the debt. But they sell it to yet another creditor for even less. Along the way, they are not notified that you even filed bankruptcy let alone received a discharge. They do not use best practices to check to make sure you have not filed bankruptcy. They just start trying to get money from you.
How do you protect yourself?
- You need to have a copy of your bankruptcy paperwork including schedules D, E, and F to show you listed the underlying creditor. You also need a copy of your letter of Discharge to show that you did receive a discharge in bankruptcy.
- You need to check your credit report. Make sure that all your creditors listed have reported the debt as discharged in bankruptcy. If they have not reported it correctly, you need to dispute the reporting with EACH of the 3 credit reporting agencies.
- If you get any communication from a creditor you don’t know, make sure to find out what was the card that issued you credit and when. Most likely this needs to be done in writing so make sure to get this information from the person calling you.
Here is something else you need to know…
Contacting you about a debt that is discharged is a violation of the Bankruptcy Automatic Stay and is punishable by $1,000 per violation (ie per contact) and $5,000 per known violation. You honestly have the power. They have to prove you owe the debt AND they have to prove who you entered into this payment agreement with as the underlying creditor. You have to prove you listed the underlying creditor!
The bankruptcy court can prosecute these violations, but you have to do you part to notify the creditor FIRST.
What if you forgot to list the creditor, but the debt was owed prior to the date you filed your bankruptcy? Is there anything you can do?
Yes! You can pay the fee to reopen the bankruptcy and add the creditor (if your jurisdiction requires you to go through the hoops). Many times all it takes is your bankruptcy attorney writing a letter to the creditor and they will stop attempting to collect on the debt. It may still show up on your credit report and not show as discharged, but at least you are not at risk of a lawsuit or garnishment.
You have spent the money to file your case and gone through the pain and headaches of your bankruptcy case… don’t let these creditors take that accomplishment away from you! Fight back. You can win.
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Helping people gain the legal knowledge they need to live their best life.
