Have You Been Sued by a Creditor After Bankruptcy?

Are you being sued by a former creditor?

The purpose of filing for bankruptcy is to discharge debt. Protect your discharge by taking action if creditors attempt to collect after bankruptcy.

I received a call yesterday from an old bankruptcy client. Nice guy, retired from the military. He and his wife were quite alarmed to receive a visit from the sheriff serving them with notice of a collections lawsuit on a debt they discharged in bankruptcy. I opened their file to double check that the debt had been included in their filing and sure enough it had been. We surrendered a parcel of vacant land that had dropped precipitously in value to the bank over a year ago. The bank received notice of the filing and the discharge, but now they were suing. I immediately referred my clients to an attorney who does a lot of good work enforcing debtor’s rights in Bankruptcy Court. Even though my clients are being sued by their former lender, it soon might be time for them to return the favor.

The bankruptcy discharge is an order of the Court prohibiting creditors from attempting to enforce old debts that were included in the bankruptcy. Discharging debts in bankruptcy wouldn’t mean much if creditors could turn around and sue once your case had closed. A creditor who violates the discharge order by filing a collections lawsuit is in contempt of court an act punishable by sanctions and an award of attorneys fees. Often, filing a counter suit for sanctions isn’t necessary, a phone call reminding the creditor that the debt has been discharged is sufficient. However, when this falls short and creditors keep coming after you for a debt you discharged in bankruptcy, you might have no choice but to sue yourself.