Recently, clients have contacted me stating creditors listed in their bankruptcy have been contacting them via letters and phone calls. Clients are confused because they thought the purpose of filing bankruptcy was to eliminate the debt and to stop creditors from contacting them. Once a debtor files bankruptcy, creditors are put on notice that the debtor has filed bankruptcy. Practically speaking, creditors should then cease all communications with the debtor. This article will explain what happens if they continue contacting debtors.
What is the Law?
Under the FCCPA, a creditor is not allowed to contact a debtor and attempt to collect a debt if they have knowledge that the debtor is represented by an attorney. See Fla. Stat. 559.72(18). This can get tricky in the bankruptcy realm of things. For instance, post-bankruptcy, a creditor may not call the debtor and ask for payment, but if the debtor still has the creditor’s property, the creditor may ask the debtor for the property back. Thus, the purpose of the communication is extremely important. In a recent case, a creditor was notified of the debtor’s bankruptcy and the attorney who was representing him for the bankruptcy, but still continued to attempt to collect the debt. I was able to recover $1,000 for the debtor for this misconduct.
Another tricky situation arises if a debtor has a judgment pre-filing of a bankruptcy and is having their wages garnished. Once the bankruptcy is filed, the garnishment is frozen due to the court ordering an automatic stay, which was discussed in a previous blog. If a debtor does not own a home, they are allowed a “wild card exemption” in the amount of up to $4,000 to protect personal property. See Osbourne v. Dumoulin (In re Dumoulin). Whatever is not protected under the wild card exemption, and is not listed in the bankruptcy, is fair game for collection after discharge of the bankruptcy. For instance, in a recent case, my client was having his wages garnished pre-filing of the bankruptcy. However, he used up his whole wild card exemption, so he was unable to protect the rest of the garnished wages. After his bankruptcy discharge, the creditor proceeded with the garnishment. This was allowed because the garnished wages were not protected by the wild card exemption.
Moreover, the FCCPA prohibits creditors from attempting to collect a debt from a debtor if they know the debt is not legitimate. See Fla. Stat. 559.72(9). Once a debtor’s debt is discharged in bankruptcy, the debt is no longer legitimate. Thus, if the creditor attempts to collect the debt from a debtor after discharge, they are in violation of the statute. In a recent case, one of my clients discharged a medical bill in their bankruptcy. After the bankruptcy was complete, the creditor continued contacting my client attempting to collect the debt. This was a violation of both Fla. Stat. 559.72(9) & (18) because the client did not owe the debt anymore, and the creditor should have known about his representation for the bankruptcy.
If a creditor violates the FCCPA, the statute provides up to $1,000 in statutory damages, any actual damages, attorney’s fees and costs. Further, if a creditor commits any of the violations described above, they are most likely in violation of the bankruptcy automatic stay, as well ( this will be discussed in a future blog).
What Should You Do?
If a creditor contacts you via mail or phone after you have filed bankruptcy, you should immediately contact Berkowitz & Myer. If you did not use our firm for your bankruptcy, we can work with your bankruptcy attorney to resolve the matter. If you hired Berkowitz & Myer for your bankruptcy, then you are already in good hands. If you are being harassed by creditors or are considering filing for bankruptcy, contact our firm for a free consultation.