We have had a rash of creditors and debt collectors trying to collect their debts illegally recently, I'm not sure why. I guess times are tough all over, particularly if you are in the debt collection business. If creditors or debt collectors try to collect their debts during a bankruptcy case, without first getting permission from the Bankruptcy Court, that is a violation of the "automatic stay," one of the fundamental protections of people that file bankruptcy.
Under the Bankruptcy Code, you have the legal right to sue that creditor for any actual damages that you have, punitive damages, court costs, and most importantly, attorney fees. I'm not kidding about the attorney fees, they really are the most important part. If the violating creditor or debt collector didn't have to pay the debtor's attorney fees, the debtor would have to pay them, and if they didn't have the money to pay the attorney, a lot of these actions wouldn't get filed, that should have been filed.
If a creditor or debt collector tries to collect a discharged debt after the bankruptcy discharge, that is a violation of the bankruptcy discharge. The Discharge is the permanent, federal court order that extinguishes or cancels the debtor's personal liability to pay most types of debts. While the Bankruptcy Code does not have a specific section that provides for a cause of action or lawsuit, as for violations of the automatic stay, the Bankruptcy Court can punish a violator of the discharge injunction.
The debtor's attorney can bring an action against them for contempt of court (for violation of the discharge order), and also under Section 105(a) of the Bankruptcy Code, which gives the Bankruptcy Judge the power to enforce their own orders. My office is available and ready to help our clients stop illegal debt collection action by creditors and debt collectors. Depending on the facts of each case, we will sometimes send a final demand to the violating party, trying to get them to stop, or to withdraw their demand.
If they won't, we file an action in Bankruptcy Court, and ask the judge to award damages, sanctions, and/or attorney fees and costs. Unfortunately that is a fairly common occurrence. But if enough other debtors and their attorneys file these types of actions, that may change. The "word will get around" that creditors and debt collectors cannot engage in illegal debt collection, particularly in connection with a bankruptcy case.