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Dealing with Creditors after Bankruptcy Discharge

Updated on June 11, 2014

Finding out that the judge has decided to approve your bankruptcy petition and discharge your debts will be one of the most relieving days of your life. You’ll be able to move forward, rebuild your credit, and start life with a clean slate. Until, of course, the day a bill collector decides to call.

Unfortunately, most creditors know that the majority of people filing for bankruptcy do so with the aid of a lawyer and don’t really understand their rights. As such, they’ll continue to make attempts to collect a debt that you no longer actually owe, hoping that you’ll fall victim and send them some sort of payment.

Your Rights as Granted by the Bankruptcy Courts

First of all, you need to understand the rights that your bankruptcy case afforded you. After a judge discharges your debt your creditors will no longer be allowed to contact you by mail or telephone. They cannot sue you for payment and they will no longer be allowed to report your debt as unpaid to the credit bureaus.

A discharge of your debts means that you are no longer obligated to pay. Give copies of any correspondence to your attorney, log the date and time of any phone calls you receive, and check your credit report regularly to ensure your creditors have closed your accounts and stopped reporting.

Why Do the Creditors Keep Calling?

By now you’re probably wondering why the creditors bother calling at all, especially since they know your debt has been discharged. Simply put, they’re looking to take advantage of you.
Here’s an example. Let’s say you owed Creditor X a sum of $10,000. The judge has discharged your debt and you now owe Creditor X a whopping total of $0. Even though your debt has been discharged, a third party collections agency will contact Creditor X and offer to buy your debt for $10. Creditor X would rather show a profit of $10 than a loss of $10,000 so they agree.

The third party collections agency, Agency B, how owns your debt. They decide to start calling in the hopes that you will become frustrated or confused and pay them. You might, especially considering you don’t recognize the name of Agency B or understand why they are calling.

Once a debt is discharged you are no longer legally responsible for it, regardless of whether or not your creditors sell them to other agencies. It doesn’t magically evolve into a new debt account just because it’s been transferred. The creditors hope that you will either be confused or feel genuinely guilty about having not paid them before. If you pay, Agency B is suddenly $10,000 richer. If not, they’ve only lost $10 – no skin off their backs.

Debt Collection after Bankruptcy is Illegal

No matter how you look at it, a creditor attempting to collect on a discharged debt is completely illegal. You have no obligation to pay anyone after your debt is discharged and should report harassing letters and phone calls to your bankruptcy attorney immediately. He’ll be able to help you stop the credit companies from calling.


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    • Miss Belgravia profile image

      Kathleen 8 years ago from Fort Worth, Texas

      Great summary of how to handle a common problem.