Bankruptcy Banishes Creditors – Even the Polite Ones

If you’ve been reading our blog, you already know that one of the biggest benefits to filing for bankruptcy is an end to harassment from creditors.

That means no more late-night phone calls and no more nasty letters.

But it’s not only the offensive phone calls and letters which will stop.  A bankruptcy judge recently held that he might sanction a creditor for sending a fairly innocent letter to a bankruptcy debtor.  That’s good news – it means relief from any and all creditors who try to contact you, not just the nasty ones.

In that recent decision, a debtor was granted a discharge from all of its debts at the end of its bankruptcy case, which meant that it owed no more money.  One of the debtor’s creditors sold its claim to another company.  That company then sent a letter to the debtor describing the different payment methods the debtor could make.  The letter stated that the debtor did not need to respond to the letter, as it was “for informational purposes only.”  The letter added that if the recipient of the letter were in bankruptcy, it could just forward the letter to its counsel or the bankruptcy trustee.

The debtor sued the company who had sent it the letter, as well as the original creditor that had sold its claim.

The original creditor protested that it had nothing to do with sending the letter.  The court rejected that argument, reasoning that it shouldn’t have sold its claim to a company that would continue to harass the debtor.

The company that had actually sent the letter argued that it had simply mailed out a standard, informational letter.  The court rejected this argument as well.  According to the court, the company should have made clear that a debtor in bankruptcy did not need to make any payment.

Before the judge finally decides whether to sanction the parties sued by the debtor, the parties have some time to submit more evidence in support of their arguments.  From the judge’s strict tone in the case, we’d venture to guess that the wind is blowing in favor of the debtor.

As it should.

Contact Freedom Law Firm today for a free consultation at 702-903-1208.