The newest debt collection trend has a dangerous component. Uncollectible debts are being sought by aggressive debt buyers who pressure unsuspecting debtors into paying them off. Because these debts are no longer legally collectible, they can be bought by debt collectors for almost nothing.
Now some creditors are being accused of intentionally failing to update credit records in an attempt to pressure debtors to repay old accounts. Before you pay on that old account, make sure that you understand your rights, especially if the debt was discharged under bankruptcy.
Many debtors have recently sued creditors for failing to update their credit histories. Creditors claim they never received bankruptcy notices. Consumer advocates, however are blaming the creditors for intentionally ignoring such notices.
I found several cases in which a major creditor failed to properly update a credit file for an account discharged through bankruptcy. In some situations, the debtor paid on the debt in order to resolve the situation, even though they legally owed nothing.
One case of particular importance involved a consumer repaying a debt of over $9,500 in order to close on a mortgage loan. The lender understandably required that this liability be resolved prior to loan closing. Even though the debt was discharged in bankruptcy, the debtor paid it off so that he could close on the mortgage.
The resolution of this case was very interesting. The court decided that the creditor “filed an erroneous credit report” to pressure the debtor “to pay a discharged debt.” The creditor was ordered to refund the entire payment plus an additional $14,000 in fines and attorney fees for its “cavalier attitude toward the debtor’s motion.”
Efforts to collect discharged debt are becoming more commonplace in today’s debt collection market. These efforts are illegal under bankruptcy law. If you have experienced collection efforts or inaccurate credit reporting on a discharged debt, you may have additional rights that a qualified and licensed attorney could help you with. Protect yourself when your rights have been violated!
