Interviewer: What happens if you forgot about a creditor and didn’t put them on your bankruptcy petition?
Andrew Campbell: Unfortunately, there have been some changes in law. You have to list all your debts, and you have to list the proper address of the creditors. If you don’t, then the debt is not discharged. I think this is kind of silly, because the old rule was as long as it was an unsecured debt, like a credit card debt or a hospital bill, a failure to list it doesn’t really hurt anybody. This is because most bankruptcies are no-asset bankruptcies, meaning there’s nothing that can be taken from the debtor to distribute to the creditors.
If that were the case, then the creditor would be prejudiced, right, because if they didn’t receive notice of the bankruptcy, they’re not going to get any money either. If it’s an asset bankruptcy, you’ve got to be extremely careful. If it’s a no-asset bankruptcy, the old rule was, well, the creditor wasn’t prejudiced, so even if they didn’t get notice, the debt is still discharged. Unfortunately, that’s been overruled recently.
Creditors Violating the Automatic Stay
Interviewer: How common is it that when someone files bankruptcy and some time has gone by and then a creditor will call them or send them letters?
Andrew Campbell: Remember, if it’s not a debt collector—if it’s just a creditor, then the FDCPA doesn’t apply. It could be a violation of the automatic stay.
What Will Your Attorney Do if a Creditor Violates the Automatic Stay?
This rarely occurs. A lot of attorneys do get confused with this issue. This is because while there is a penalty for violating the automatic stay under the bankruptcy law, it is governed by certain kinds of rules. If the creditor or debt collector had actual knowledge of the case—in other words, if the notice was sent properly to the proper address, and they still did this, I would do the following two things.
If I wanted to enforce the bankruptcy law, I would send them a letter and say, you better cease and desist. If they send another letter, then I’ll sue them in bankruptcy court. In bankruptcy court, the test requires that they’ll be actual damages. There has to be some kind of actual harm.
Companies That Violate the FDCP Act Are Subject to Fees Ranging from $100 to $1000
The FDCPA is a law that is a strict liability statute. What I mean by that is if you violate the statute, and even if there’s no harm to the consumer, you’re still liable for between a hundred dollars and a thousand dollars. That’s because the statute itself says there’s statutory damages, which just means if you violate the law, you’re going to have to pay something.
That’s the difference between the FDCPA and a lot of other laws. If you violate it, there’s at least a statutory damage remedy that can be pursued.
Whether it’s a hundred dollars or a thousand dollars, if you think of a scale, there’s three factors—the frequency of the violations, the persistent nature of the violations, and the degree to which those violations are intentional or not. If you have a collector who’s violated three different FDCPA provisions, and they did that three different times. It wasn’t just one letter that had three violations. It was three acts—maybe a letter and two phone calls. Then, it’s going to be more toward the thousand than toward the hundred.
Again, the degree to which the act is intentional is a factor. It looks at the nature of the act and whether it could have been prevented.
It Is Advisable to Contact an Attorney for Even One Contact from a Creditor after You File for Bankruptcy
Interviewer: How many letters do these debt collectors send or how many calls should a consumer that has filed bankruptcy receive before they contact an attorney?
Andrew Campbell: If they get one notice, that’s enough to file a FDCPA lawsuit.
Interviewer: They wouldn’t get much compensation, right?
Andrew Campbell: No. It’s not worth a ton of money, but the point is that a lot of people don’t even know there’s money available there. They don’t realize their rights. It depends on what you think is worth your time.