When a Creditor Violates the Bankruptcy Discharge

Your bankruptcy discharge is a court ordered permanent injunction prohibiting certain creditors from taking collection action against you. A debt discharged by your Massachusetts bankruptcy cannot be collected from you. Unfortunately, some creditors refuse to take "No" for an answer. If you are contacted regarding a discharged debt, here's what to do:

Inform the creditor of your bankruptcy discharge

When a debt is discharged in bankruptcy it does not simply vanish. The debt still exists; it is just not "collectible." This debt may be sold or transferred to another collector, and the new collector may not know about your bankruptcy discharge. This is not to say that ignorance is a defense to violating the court order! However, informing the collector of your bankruptcy discharge is usually enough to stop all collection activities.

The collector may ask you for information about your case, including your case number, bankruptcy chapter (Chapter 7 or Chapter 13), and the date of the discharge. These are reasonable requests if meant to update their records so you are not bothered in the future. If you do not have this information, simply refer the collector to your Massachusetts bankruptcy attorney.

Ask for sanctions

In some cases the creditor knows about the bankruptcy discharge and still tries to collect. Whether the action results from ignorance or arrogance, Massachusetts bankruptcy courts take a dim view of creditors who intentionally violate the discharge order. When a court order is violated it is punished by contempt of court. The bankruptcy court can sanction the violator (called the "contemnor") and assess a fine, award actual damages, and order the contemnor to pay the debtor's attorney fees.

The federal bankruptcy laws offer very powerful protection for Worcester and Framingham debtors. Getting the full benefit of your bankruptcy case requires a skilled and experienced attorney. Call the Law Office of Robert W. Kovacs, Jr. toll-free at (877) 315-2641, and use the bankruptcy laws to give you a fresh start that is free of creditor harassment.

Credit Card Debt Is On The Rise

A recent survey indicates the spending habits of the American consumer. After two years of moderate credit card use, new figures from Card Hub show that credit card use has significantly increased during the past year. Consumers are on track to end 2011 with a $64 billion increase in credit card debt.

Americans are also paying off credit card debt at a slower pace. During the first quarter of each year credit card debt usually declines, mostly due to annual bonuses and tax refund checks. In 2009 and 2010, consumers paid down more in the first quarter than they charged in new debt through the end of the third quarter. This year consumers kept the cash and kept charging throughout the year. Even more disturbing is that this year's third quarter credit card debt total was 154 percent more than in the same period last year.

Carrying large credit card debt can create serious financial problems. According to the Federal Reserve's credit card repayment calculator, a $5,000 debt at a 15% interest rate will take 7 years to pay off at $100 per month. During this time you will pay an extra $2,896 in interest charges!

If credit card fees are eating up your paycheck, it may be time to consider bankruptcy. During a Massachusetts Chapter 13 bankruptcy you are able to structure an affordable repayment plan to pay credit card debt. Whatever you are not able to pay will be discharged after three to five years of repayment.

If you cannot afford to repay anything towards your credit card debt, a Massachusetts Chapter 7 may be the answer. Chapter 7, also called a "straight bankruptcy," lasts about five months and nothing is paid to your credit cards. Most Massachusetts bankruptcy debtors are able to keep everything they own while discharging debts they cannot afford to pay.

When credit card debt has taken over your finances, call the Law Office of Robert W. Kovacs, Jr. toll-free at (877) 315-2641 and learn how the federal bankruptcy laws can help. Don't let credit card debt hold your paycheck hostage! Bankruptcy offers powerful protection from creditors and can discharge overwhelming debts.