People who file bankruptcy in New York often have questions about what can happen after the estate is closed and their debts are discharged. The bankruptcy discharge serves as a statutory injunction prohibiting any further action on the part of a creditor to seek repayment of the debt in question.
In some cases, a debtor wants to repay a discharged debt. He or she may do so by voluntarily acknowledging the debt and then paying it. Debtors sometimes choose to do this for debts owed to family members or friends. Creditors may not initiate any action to try to collect on a discharged debt, including filing lawsuits, seeking garnishments, making collection calls or other attempts. In the event a debt collector seeks to collect on a debt discharged in bankruptcy, the debtor may ask the bankruptcy court to reopen the case. The court can then hold the collector in contempt and fine the collector for the violation.
A debtor’s employer is also prohibited by law from discriminating against the debtor because the debtor filed bankruptcy or was insolvent. Governmental agencies may not discriminate in hiring, terminating or by revoking, denying or refusing to continue a contract due to a discharged debt. Private employers are prohibited from discriminating in employment practices solely based on the bankruptcy.
People have many bankruptcy misconceptions. By understanding the rights they have, both during the bankruptcy and after the discharge, people can be in a better position to respond in the event a violation occurs. When a creditor or employer has violated the law through collections actions or discriminatory employment practices due to the bankruptcy discharge, a bankruptcy attorney might be able to help file a motion with the bankruptcy court in order to reopen the case. An attorney may then present evidence and documentation to ensure the violator is appropriately punished for their behavior.