Macco & Corey P.C.

Post Bankruptcy Discharge Violations

Post Bankruptcy Discharge Violations

When an individual completes a bankruptcy case and receives a discharge order from the court, it signifies a fresh start, freeing them from specific debts and allowing them to move forward financially. The discharge order prohibits creditors from taking any action to collect discharged debts, including phone calls, letters, lawsuits, and wage garnishments. 

However, some creditors may violate this discharge order, continuing to pursue individuals for debts that have legally been cleared. These post-discharge creditor actions are known as post-bankruptcy discharge violations. In this situation, a proven Long Island bankruptcy attorney can provide you with dedicated legal aid post-bankruptcy to protect your rights.

Common Signs and Examples of Discharge Violations

Here are some common signs and examples of these violations:

  • Collection Calls or Letters: One of the most common violations involves creditors contacting debtors through phone calls, letters, or emails to demand payment on discharged debts.
  • Wage Garnishment: If a creditor garnishes your wages for a discharged debt, it’s a clear violation of the discharge order.
  • Lawsuits or Court Judgments: Creditors cannot sue or continue legal proceedings to collect on a discharged debt. Any lawsuit initiated after discharge is a violation.
  • Credit Report Violations: If a creditor reports a discharged debt as “active” or “delinquent” on your credit report, this action can harm your credit score and misrepresent your financial status, constituting a discharge violation.

Recognizing these signs early and documenting any communication from creditors can help you take swift and decisive action against any post-discharge violations.

Legal Rights of Individuals Post-Bankruptcy Discharge

A discharge order legally shields you from collection activities related to discharged debts. After bankruptcy, you have specific rights, including:

  • Protection from Collection Efforts: You are protected from any collection activities related to discharged debts, meaning creditors cannot legally contact you for payment or pursue court actions against you.
  • Right to Accurate Credit Reporting: Creditors are required to update credit reports to reflect the discharged status of debts. Incorrect reporting can be challenged under the Fair Credit Reporting Act (FCRA).
  • Right to Pursue Remedies for Violations: If a creditor continues to pursue a discharged debt, you can take legal action to seek compensation for damages resulting from these violations, including emotional distress and attorney fees.

Knowing your rights is vital to protecting yourself from creditor harassment post-bankruptcy.

How to Tackle Discharge Violations and Legal Options for Affected Individuals

When a creditor disregards your discharge order, several steps and legal options are available to address these violations:

  1. Document All Interactions: Keep a record of any communication from creditors, including dates, times, the nature of the contact, and any voicemails or letters. This documentation is vital for building a case against the violating creditor.
  2. Contact the Creditor in Writing: If you suspect a violation, send a letter to the creditor, informing them of your bankruptcy discharge and requesting they cease all collection activities. Attach a copy of your discharge order and the relevant bankruptcy case number.
  3. File a Motion for Contempt in Bankruptcy Court: If the creditor continues to violate the discharge order, you can file a motion for contempt with the bankruptcy court. The court will review your complaint, and if the creditor is found in contempt, it may be required to pay damages, including legal fees, and potentially face further penalties.
  4. Consult with a Bankruptcy Attorney: An experienced bankruptcy attorney can assist you in documenting violations, filing a motion for contempt, or pursuing additional legal remedies in case of bankruptcy discharge disputes.

Federal and New York State Laws Regulating Discharge Violations

Under federal bankruptcy law (Section 524 of the U.S. Bankruptcy Code), creditors are prohibited from attempting to collect on debts that were discharged in bankruptcy. Violations of the discharge order can lead to civil penalties and may be treated as contempt of court.

In New York, additional protections exist under state law. New York’s Debt Collection Procedures Law regulates collection practices. It prohibits abusive tactics, requiring creditors to adhere to strict guidelines when attempting to collect on debts, whether pre-discharge or post-discharge. For instance:

  • Prohibition of Harassment and Abuse: New York law prohibits creditors from engaging in harassing, oppressive, or abusive behavior during collection efforts.
  • Fair Debt Collection Requirements: The law enforces fair debt collection practices, ensuring consumers are not misled or subjected to deceptive practices.

Violations of these federal and state protections enable debtors to seek legal recourse and damages.

Gavel with money on table

Potential Consequences for Creditors Violating Discharge Orders

  • Monetary Penalties: Courts may impose fines on creditors who knowingly violate a discharge order.
  • Contempt of Court: Creditors found in contempt of the bankruptcy court for discharge violations can face additional sanctions.
  • Compensatory Damages for Debtors: Debtors affected by discharge violations may be awarded compensation for financial harm, emotional distress, and attorneys’ fees.
  • Punitive Damages: In cases where the violation is willful or egregious, the court may also award punitive damages to deter future misconduct by the creditor.

Steps to Protect Yourself After Receiving a Bankruptcy Discharge

  1. Keep a Copy of Your Discharge Order: Having a copy of your discharge order readily available allows you to respond quickly to any creditors who attempt collection.
  2. Review Credit Reports: Regularly check your credit reports to ensure all discharged debts are accurately reflected. If errors appear, file a dispute with the credit bureau under the Fair Credit Reporting Act.
  3. Consult a Bankruptcy Attorney: If you are contacted about a discharged debt, seek guidance from a bankruptcy attorney with experience in handling discharge violations. They will take swift legal action to assert your rights.
  4. Communicate Clearly with Creditors: If a creditor contacts you, remind them of your discharge and provide relevant case details. Most creditors will stop if they realize they are in violation.
  5. Stay Informed on Your Rights: Educating yourself on your legal rights can help you quickly recognize when a creditor crosses the line, allowing you to address any issues before they escalate.

How Our New York Bankruptcy Attorneys Will Address Post-Bankruptcy Discharge Violations

At Macco & Corey P.C., we understand that receiving a bankruptcy discharge is a significant milestone in your financial recovery. This legal process is designed to free you from burdensome debts, allowing you to rebuild your financial future. However, the unfortunate reality is that some creditors may attempt to violate the discharge order, continuing collection efforts on debts that should no longer be pursued. Our experienced attorneys are dedicated to protecting your rights and ensuring compliance with bankruptcy laws. 

Case Assessment and Documentation of Violations

The first step in addressing potential discharge violations is to conduct a meticulous assessment of your case. Our attorneys will engage in the following actions:

  • Review of Your Bankruptcy Filing: We will examine your bankruptcy petition, discharge order, and the details of the debts included in your filing to determine the scope of your discharge.
  • Documentation Gathering: We collect all relevant documentation related to creditor communications post-discharge. This includes letters, emails, phone records, and any evidence of collection actions, such as court filings or wage garnishment notices. Proper documentation is crucial in establishing a clear case of violation.

Our partners, with their background as court-appointed bankruptcy trustees, understand the nuances of bankruptcy law. This insight allows us to identify potential violations that may not otherwise be immediately obvious.

Communication with Creditors to Cease Unlawful Collection Efforts

Once we identify potential violations, we take proactive measures to halt creditor actions:

  • Formal Demand Letters: We draft and send formal letters to the creditor outlining the discharge order and specifying the legal implications of their collection attempts. These letters serve as official notice that you are aware of your rights and are prepared to take legal action if necessary.
  • Negotiation Attempts: In some cases, direct negotiation with the creditor may resolve the issue amicably. Our attorneys are skilled negotiators and can facilitate a quick resolution that protects your interests.

Filing a Motion for Contempt if the Creditor Persists

If a creditor continues to pursue collections after being notified of the discharge, we can escalate the situation by filing a motion for contempt with the bankruptcy court. Here’s how this process works:

  • Contempt of Court: When a creditor disregards a court order, it may be held in contempt. This legal action can lead to penalties, including fines and potential sanctions against the creditor.
  • Preparing the Motion: Our team will prepare the motion, outlining the creditor’s violations, the impact on you as the debtor, and the remedies we seek. This may include financial damages and punitive actions against the creditor.
  • Representation in Court: We will represent you at the court hearing, presenting compelling arguments and evidence to support your case. Our experience in bankruptcy court allows us to navigate the legal landscape effectively.

Pursuing Damages for Financial Losses and Emotional Distress

The emotional and financial toll of post-discharge violations can be severe. At Macco & Corey P.C., we recognize the importance of seeking justice and compensation for the difficulties you face. In addition to seeking a discharge injunction, we may pursue:

  • Emotional Distress Claims: In many cases, the stress and anxiety caused by creditor harassment can lead to emotional distress. We work to quantify this impact and include it in your claim for damages.
  • Financial Recovery: We will calculate all losses incurred due to the violation, including any costs associated with continued collection efforts, legal fees for enforcement actions, and other related expenses. We aim to secure a comprehensive settlement that addresses your needs.

Providing Ongoing Guidance and Support

  • Educational Support: We can provide ongoing education about your rights post-discharge, equipping you with the knowledge to respond effectively to any future creditor attempts.
  • Credit Monitoring Advice: We recommend strategies for monitoring your credit report to ensure that your discharged debts are correctly reported. This proactive approach can help you identify any discrepancies quickly.
  • Long-Term Financial Planning: As you rebuild your financial life, our attorneys can assist with creating a sustainable economic plan, ensuring you avoid falling back into debt and fostering healthy financial habits.

With over 70 years of combined experience and our roles as court-appointed bankruptcy trustees, we possess a unique perspective on the bankruptcy process. Our deep understanding of both the debtor and creditor sides of bankruptcy law equips us to deal with violations and advocate aggressively on your behalf effectively. We are equipped to ensure that you receive the full benefits of your bankruptcy discharge.

Get Strong Legal Support from Top-Rated New York Bankruptcy Attorneys 

If you believe that a creditor has violated your bankruptcy discharge, don’t hesitate to reach out to our experienced New York bankruptcy attorneys. At Macco & Corey P.C., we are dedicated to helping you reclaim your financial freedom. Our comprehensive legal services are designed to meet your unique needs, providing you with the support and guidance necessary to address post-bankruptcy discharge violations. Let us help you move forward confidently and free from the shadow of unlawful creditor actions. To schedule your free initial consultation, call us at 631-549-7900 or contact us online.