What To Do About Debt Collection After a Bankruptcy Discharge

Why a Bankruptcy Discharge Order Is So Powerful

A bankruptcy discharge is the light at the end of the tunnel for many people struggling to repay serious debt. It’s when your fresh start begins.

The discharge is the court order that wipes out your eligible debts and stops creditor harassment on certain debts for good. This is why many people who file bankruptcy experience tremendous relief when they get their bankruptcy discharge order.

It’s illegal for creditors or collection agencies to call you or correspond with you to try to collect a discharged debt. Regardless, some collection agencies and creditors may attempt — knowingly or unknowingly — to collect a discharged debt.

Is All Debt Collection Activity Prohibited After a Bankruptcy Discharge? 

Most, but not all, debt collection activity is illegal following a successful bankruptcy discharge.

Debt collectors aren’t allowed to call you, send you letters, contact you on social media, or talk to you in person about any debt that was discharged in bankruptcy. This includes medical bills, credit card debt, personal loans, or any other debts that were discharged. (To learn more, read the section titled “What Debt Is Dischargeable Debt in Bankruptcy?” below.)

No one can sue you, garnish your wages, or garnish your bank account for a debt that was discharged in bankruptcy. The debt is gone! 

What Debt Collection Activity Is Allowed After a Bankruptcy Discharge?

The discharge order only provides legal protection for discharged debt and debt that was included in your bankruptcy petition.

Collection efforts can continue for two types of debts:

• Non-dischargeable debts, which are any debts that weren’t discharged in your bankruptcy case

• Post-petition debt, which is any debt you incurred after you filed your bankruptcy petition

To learn more, see the section titled “What Debt Will I Be Stuck With Even if I File Bankruptcy?” below.

Why Am I Being Contacted About a Discharged Debt?

Once your bankruptcy case is processed, the court issues a discharge order, which wipes out your dischargeable debt. Though all the creditors you listed in your bankruptcy paperwork receive a copy of this discharge order, it sometimes gets lost in the shuffle. This is even more likely to happen if your account has been bought and sold several times through a debt buyer. 

So though it’s illegal, in some cases a debt collector may call you. A single call may be an honest mistake, but if a debt collector continues to call after you’ve told them about your bankruptcy, you can take legal action to stop them.

What Do I Do if a Debt Collector Contacts Me About a Discharged Debt?

If you have a bankruptcy attorney, tell the debt collector to contact your attorney. If you don’t have an attorney, give a first-time caller a warning and follow these steps: 

Step 1: Make Sure the Debt Collector Is Legitimate

Before you give out any information, identify the creditor or debt collector and make sure it’s not a scam call. Get the name of the person you’re talking to as well as the company name, address, and phone number. Ask for the account number and the alleged amount owed. Record the date and time of the call. 

Step 2: Tell the Debt Collector About Your Bankruptcy Discharge

If the debt collector seems legitimate, simply tell them that you have an order of discharge from the bankruptcy court. Then, give them the discharge date and bankruptcy case number. 

As a courtesy, you can offer to fax or mail a copy of the bankruptcy order that discharged the debt. Then tell them not to contact you again. Keep the conversation short.

Step 3: If the Debt Collector Persists, Consider Taking Legal Action

If a debt collector’s phone calls or other contact persists despite your warning, you can take action against the creditor in bankruptcy court. The bankruptcy court can order a creditor to pay attorney fees, compensation to the bankruptcy filer, and penalties for violating the discharge injunction. 

Many people choose to hire a bankruptcy lawyer to help with this process because it can get complicated. The good news is that the court can order the creditor to pay your attorney fees or reimburse you for attorney fees you’ve already paid. Many attorneys offer free consultations, which can help you find the right person to represent you.

Tip: Check Your Credit Report, Too!

Creditors and debt collectors must report accurate information to the credit reporting bureaus. This is outlined in the Fair Credit Reporting Act (FCRA), but it doesn’t always happen. This is why it’s a good idea to get a free copy of your credit report and check for inaccuracies. Inaccurate reporting could be considered a violation of the discharge.

Each discharged account should have a $0 balance and show that the account was discharged in bankruptcy. If you signed a reaffirmation agreement, that should be noted on your credit report. 

Check your credit report for the following after bankruptcy discharge:

• A balance other than $0 for unsecured discharged debt

• An inaccurate balance for secured debt

• Inaccurate balance after signing a reaffirmation agreement

• No mention of a bankruptcy discharge

• A “charge-off” instead of a discharge

• Hard pulls on your credit report

How Do I Get a Bankruptcy Discharge?

To get a discharge through bankruptcy, you must have a bankruptcy case. To file bankruptcy, you have to meet certain requirements and file a bankruptcy petition. 

Consumers usually file either Chapter 7 or Chapter 13 bankruptcy. You’ll want to look at your income, debts, and what assets or property you own to decide which is best for you. Upsolve has a free filing tool to help you file a Chapter 7 bankruptcy without an attorney.

In addition to filing a petition for bankruptcy, you’ll have to fill out several bankruptcy forms, pay a filing fee, take two required courses, and meet with a bankruptcy trustee before the discharge can be entered. 

Once you do all this and complete any required repayments, the bankruptcy trustee and judge give a seal of approval. Then your discharge will be granted!

What Is a Bankruptcy Discharge Order? 

An order of discharge in bankruptcy officially ends your personal liability on certain debt. It also orders a permanent stop to collection actions. 

In a Chapter 7 bankruptcy, the order is usually granted 60–90 days after the meeting of creditors. In a Chapter 13 bankruptcy filing, the order of discharge is granted after you complete monthly payments on your three- or five-year repayment plan.

What Debt Is Dischargeable Debt in Bankruptcy?

Chapter 7 and Chapter 13 bankruptcies help filers get consumer debts discharged. You can get credit card debt, personal loans, medical bills, old utility bills, old cell phone bills, car loan charge-offs, back rent, and other types of unsecured debt discharged in bankruptcy. 

What Debt Will I Be Stuck With Even if I File Bankruptcy?

The order of discharge in bankruptcy doesn’t get rid of all types of debt. The debt you’re stuck with is called non-dischargeable debt. Here are some common examples:

• If you have child support, alimony, or other types of court-ordered domestic support obligations, you must continue making those payments.

• IRS debt generally won’t be discharged, but there are some exceptions for old income tax debts. 

• Debt stemming from a DUI-related personal injury or property damage case will still be owed. 

• If you owe court fines and fees, whether it’s related to a DUI or not, you’re not going to get that debt discharged in bankruptcy. 

Also, if you have secured debts, such as a mortgage or car loan, you will have to keep paying those if you want to keep the collateral (your house, car, etc.).

Note: You can have your student loan debt discharged in bankruptcy, but you’ll have to take some extra steps and prove it’s causing undue hardship. 

The Automatic Stay Is Temporary, But the Discharge Is Permanent

When you first file a Chapter 7 or Chapter 13 bankruptcy, an automatic stay goes into place. The automatic stay immediately puts a stop to debt collection activity, including foreclosure, repossession, eviction, and wage garnishment. 

The automatic stay remains in place during the bankruptcy process unless a creditor objects to the stay and the court agrees to lift it. This is rare. When the order of discharge arrives, the automatic stay ends, but at that point, you won’t need it anymore.

Let’s Summarize…

In bankruptcy, some debts are dischargeable and others are non-dischargeable. After you receive the court-ordered bankruptcy discharge, creditors, debt collectors, and collection agencies can’t contact you to try to collect on dischargeable debts. This includes medical bills, credit card bills, and old utility bills.

If a creditor attempts to collect on a discharged debt and is persistent in its efforts, you may want to seek legal advice from an experienced bankruptcy attorney. You have legal protections under bankruptcy law, the Fair Debt Collection Practices Act (FDCPA) and the Fair Credit Reporting Act (FCRA). Creditors and debt collectors that violate the law can be punished with fines and other sanctions.