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Judge orders BofA to pay for creditor harassment after bankruptcy filed

This blog has frequently discussed the idea that a creditor must stop collection activities when a person files for bankruptcy protection. Generally, creditors can only resume debt collection activities with permission of the court after a bankruptcy petition is filed, based upon specified rules that do not allow resumption of collection activities in all cases. One of the basic protections of a bankruptcy petition is that a bankruptcy case can serve to stop creditor harassment while the case is pending in the bankruptcy court.

Do violations of the basic protection occur? A bankruptcy judge outside of Ohio has ordered Bank of America to pay damages and fees after the bank continued to attempt to collect on a debt after the debtor filed for bankruptcy. The judge found that the bank ignored an injunction in the bankruptcy proceeding, known as a debtor's discharge, which is intended to prohibit the creditor from pursuing the debt.

The judge reportedly imposed the penalty against the lender after the bank made a reported 38 calls seeking payment on the debt after the bankruptcy petition was filed and the bank knew, or should have known, that the injunction was in place.

It should be known that it is not only primary, or original, lenders may have been known to run afoul of the protection against creditor harassment. Many creditors send information about debts to outside collection agencies. Banks also often sell the right to sue on a debt. The new collection agency is also prohibited from making attempts to collect after a bankruptcy petition has been duly filed.

Financially distressed Cincinnati area residents who are tired of the phone ringing related to outstanding debts may wish to consider speaking with an experienced Chapter 13 or chapter 7 bankruptcy lawyer to learn what relief a bankruptcy petition can accomplish on an individual set of financial circumstances.

Source: The Huffington Post, "BofA Allegedly Called Debtor 38 Times After He Filed For Bankruptcy," Alexander Eichler, Mar. 30, 2012

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