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Judge threatens bank with sanctions to leave consumers alone

As many of our Cincinnati readers might know, one of the benefits of filing for Chapter 7 bankruptcy is that it generally ceases harassment by creditors. Many debts are wiped clean under Chapter 7 bankruptcy, meaning the debts once owed are discharged. However, even after going through bankruptcy, some consumers still find themselves being targeted by companies about their no-longer-accurate debts.

In one recent case involving a nationally known lender, a judge sympathized with a couple who had gone through Chapter 7 bankruptcy and had their home loan discharged. Bank of America bombarded the couple with phone calls and letters trying to collect the debt, which was no longer valid. Despite intervention from a bankruptcy court judge, the company continued to contact the couple.

In response, the judge ordered the bank to pay $10,000 plus court costs for every month it continues to contact the couple. The judge said that he realized that the amount was a relative pittance for a huge institution such as Bank of America; however, he went on to say that he hoped the gesture would serve as a reminder for the industry as a whole to stay abreast of their former clients' situations and not unduly harass people whose obligations have been satisfied.

This follows another case from earlier this year in which a bankruptcy judge fined Bank of America more than $200,000 for repeatedly violating court orders in regard to contacting a couple about a loan-modification agreement. Observers said that the issue is one that has been seen nationally in regard to Bank of America.

Source: The Wall Street Journal, "Bankruptcy Judge Sends a Message to Bank of America," Peg Brickley, Oct. 4, 2013

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