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Dear Bankruptcy Adviser,
Is it legal for a finance company to try to recharge you for a debt discharged, plus interest, in Chapter
13 bankruptcy? This has been done to me, and my debt was discharged 10 years ago. Plus my name has been
forged on a $45,000 loan document with loans tied up in it that don't belong to me, and were done without
my consent or knowledge with the property involved. I don't know where to turn.
-- Stephanie
Dear Stephanie,
I have seen collection agencies and finance companies commit just about every type of inappropriate or downright
illegal conduct. Many former clients have called me and stated that a collection agency is currently trying to
collect on a debt that was included and eliminated in his or her bankruptcy.
Typically, I will contact the agency and ask, "Please show me how your debt is exempt from federal
law and I will show that information to my client." My client or I have never heard back from one of these types
of rogue collection agencies.
I once had a conversation with a
senior collector for a collection agency. He told
me with all sincerity that if his company is trying
to collect a debt that was not properly marked
as "discharged in bankruptcy" that he will tell
the debtor, "sorry, that debt was not eliminated
in your bankruptcy and you have to pay it."
I was not shocked because I know most people will believe such outrageous statements. People are
naïve enough to believe that the collector would not illegally try to collect a debt that was eliminated in
bankruptcy. However, I always tell my clients to call me when they receive this type of call.
The new laws established in October
2005 have emboldened collectors to commit all
types of improprieties to collect debts. The most
common statements are: "Oh, sorry, under the new
law, our type of debt cannot be eliminated;" or
"You did not list our collection agency in your
list of debts therefore you have to pay us;" or
"The law change makes it almost impossible to
qualify for bankruptcy, so your attorney should
have told you that you would have to pay us back;"
or the worst of them all, "Under the new law,
you have to pay back at least $10,000 of your
debt and we will make sure that we notify the
courts once you pay back the account with us."
All debt is eliminated in the vast majority of bankruptcy cases. The law change does have some effect
on people's ability to eliminate certain types of debt. However, the majority of consumer debt (credit cards, collection
accounts, personal loans, payday loans and car loans) are just as easy to eliminate now as before. As under the old
law, student loans, domestic support obligations, loans obtained through fraud, injuries resulting from a drunken
driving accident, and some delinquent income tax debts survive a bankruptcy filing.
Regarding the identity theft issue, you need to act immediately to notify the lender of the fraud.
Typically, you will need to complete a notarized fraud affidavit that indicates you never signed your name or opened
the account in question.
You also have to contest the account with the credit bureaus directly, provide the fraud affidavit
and any relevant information to show that you never signed up for this loan. I hope that will rectify the issue,
but depending on how long you have waited or how long ago the fraud occurred, you could face a battle to eliminate
the account as it stands in your name.
I am so sorry you are dealing with
all these overwhelming issues at the same time.
You must act right away to make sure the problem
does not get worse. Putting your head in the sand
and hoping things will work themselves out is
not an approach you can afford to take. Be proactive
and diligent and you ought to be able to solve
your current dilemma.
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