When people file for Chapter 7 bankruptcy, the court sells off their nonessential assets in order to repay their creditors. Secured creditors generally receive top priority. Unsecured creditors are less likely to receive any of the proceeds from the sale of these assets.
The bankruptcy court may discharge certain creditor claims, meaning that the person who filed for bankruptcy no longer owes those creditors. Unfortunately, that doesn’t stop some determined collectors. That’s what one couple in Maine says happened to them, and now they are taking legal action.
The couple filed for Chapter 7 bankruptcy in early 2015, with debts totaling nearly double what their assets were. The only secured creditor was the bank where they had their mortgage. Among the unsecured debt discharged by the bankruptcy judge was $2,700 in unpaid hospital bills.
Despite the bankruptcy court’s ruling, the couple says that a debt collection agency continued to call them and send them letters demanding payment of the bills. They say that they informed the collection agency multiple times that they no longer owed the debt due to their Chapter 7 filing and gave the agency the name of their attorney.
That did not stop the demands, however, according to the couple’s lawsuit against the agency and the hospital. The agency in question has received a rating of “F” from the Better Business Bureau.
The couple is seeking punitive damages from the defendants. They are also asking for attorney’s fees and court costs.
Collection agencies have a not-undeserved reputation for using aggressive and sometimes unscrupulous tactics to get people to pay what they owe. That’s why businesses hire them to collect on past-due bills. However, they should not be trying to collect debts in violation of a bankruptcy court ruling. When people who have filed Chapter 7 continue to be harassed for debts they no longer owe, experienced bankruptcy attorneys can provide legal guidance and work to protect their rights.
Source: Portland Press Herald, “Turner couple suing Central Maine Medical Center, debt collector,” J. Craig Anderson, June 28, 2016