I also have a bone to pick with the firm they have retained for collections. I’m not going to name them – for now. But I am compelled to share what happened to a former client.
This client filed chapter 13 in 2000. The credit union didn’t file a proof of claim on time. Instead, it filed a proof of claim along with a motion asking the court’s permission to file the proof of claim late. The credit union claimed it did not get notice, even though the creditor matrix (the list of creditors that get notice in a bankruptcy matter) had both its local address along with an address in Florida (which was the address also appearing on the billing statement). The court set the matter for a hearing for December 5, 2000.
Credit union’s attorney appeared along with me on that date over 7 years ago. After the hearing, the court denied the motion to file the proof of claim late. Thus, it did not get paid in the chapter 13. In 2003, the client successfully completed the chapter 13 plan and received a discharge.
Today I received a call from the client who tells me that a letter was received from an attorney on behalf of the credit union seeking payment of the debt.
Oh REALLY...
“Wasn’t this included in my bankruptcy?” my former client and former bankruptcy debtor asked me. “And isn’t this something you had to go to court over?”
“Yes,” I responded. We both had good memories. After pulling up the court file on PACER and double checking my own file, I asked the client to fax me the letter.
Not only does the letter seek to collect a debt that’s discharged in bankruptcy, but it also seeks to collect a debt that is more than 6 years old (remember, I was in court in December 2000). I’ve heard about former debtors getting collection notices years after their bankruptcy has closed, but it’s the first time (to my knowledge) that it’s happened to one of my clients. And it's not like the credit union did not know about the bankruptcy.
I’m not heading off to court with a lawsuit in hand demanding damages for violations of the Fair Debt Collection Practices Act or violations of the discharge injunction. I do not think my client wants it either. Instead, I have prepared a friendly letter advising the credit union’s new attorney that the debt was discharged (and also suggesting that the FDCPA was implicated because of the debt being more than 6 years old, and they should not be threatening suit). The purpose of the letter is two-fold: to stop the collection activity, and to let them know they should correct the administrative errors that resulted in it being mailed in the first place.
I assume the collection activity will stop and I hope that both the credit union and the firm change change their respective procedures to ensure compliance with the Bankruptcy Code and the FDCPA. I hope the letter does the trick. If it happens again with any other former bankruptcy debtor involving this firm or this credit union, I am not inclined to send a friendly letter.
However, it raises another issue: assuming (for the purposes of argument only) that this was not an oversight, I am compelled to wonder how many other former bankruptcy debtors are receiving dunning letters for debts that were included in their bankruptcy? How many aren't calling their attorneys and are instead, paying the debt thinking that they are required to. If they received a discharge, that collection activity is unlawful. If they are getting threatened with collection law suits on debts that are more than 6 years old, that could also violate the Fair Debt Collection Practices Act (a collector cannot threaten to take action that it cannot legally take).
If you were once in bankruptcy and are now getting collection notices for debts that were a part of your case, talk to your bankruptcy attorney immediately. If it has been a long time since you last spoke with your lawyer, get in touch with a good bankruptcy attorney.
