Court fines bank for collection activity after bankruptcy filing

For those facing significant debt around the Chicago area, constant telephone calls from creditors can become a daily routine. There are limits, however, to what creditors can say and when they can call. In addition, when a person files for bankruptcy, a creditor can be further limited in the actions it can take against a debtor. Yet some creditors stubbornly persist, in clear violation of the law.

Last week, a judge handed down a punishment for a bank's repeated efforts to collect money after a debtor had sought debt relief by filing a bankruptcy petition. That person additionally filed a debtor's discharge, which imposes restrictions on the creditor's ability to contact the debtor to seek repayment.

But one of the person's creditors--Bank of America--called frequently in contravention of the debtor's discharge. This is far from the first time that debtors have had trouble with the bank. Like other creditors, Bank of America uses third party collection services to recoup some of their accounts. But due to poor record-keeping, Bank of America has referred some already paid accounts to collection services. Some debtors have had to fight lengthy battles with the collection agencies to prove that they no longer owe any money.

The court imposed a fine of $12,500 for Bank of America's repeated calling in this case. Bankruptcy provides people with the opportunity to eliminate debt and begin a fresh start with their finances. And while bankruptcy places new restraints on creditors, it is important to remember that certain types of creditor conduct are prohibited, whether one is in bankruptcy or not.

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

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