The objective of every bankruptcy is to receive a discharge. The discharge says that all debts not specifically excepted are discharged, meaning the creditor holding the debt cannot collect. The creditor can’t even try to collect. Any attempt at collection violates the discharge stay. Like the automatic stay when a case is filed, the discharge stay prohibits any collection action. Unlike the automatic stay, the discharge stay is permanent. It does not expire.
Many times after discharge a debtor will receive letters, phone calls or other communications from creditors listed in the bankruptcy. There might even be collection efforts. The debtor will wonder, does this violate my discharge stay, and if it does, what do I do? The answer depends on a lot of things.
Some debts are not discharged by bankruptcy. These typically include most taxes, student loans, domestic support obligations (alimony, child support, and the like) and some debts for which the court entered an order of non-dischargeability. If the debt is of this type, collection is permitted.
Recovery of property
A discharge releases the debtor from personal liability, but it does not release any collateral the creditor might have held prior to the bankruptcy. So if you owe on a car, the bank or finance company can repossess the car after your bankruptcy if you don’t pay for it. The same is true of a mortgage. The bank can foreclose on the house. That’s all the bank can do. If it sells the car or the house and there is still money owing, it cannot try to collect from you because of the discharge.
A reaffirmation agreement is an agreement between the debtor and a particular creditor that excepts the debt from the discharge. If you reaffirmed a debt it is as if you didn’t file bankruptcy regarding that debt. The creditor may call, may repossess any collateral and may sue you personally.
Post-petition or unscheduled debts
A bankruptcy is only effective against debts that existed at the time you filed and that were included in your schedules (lists) of creditors. If a debt arose even a day after you filed, it is not affected by the bankruptcy. Similarly, if you forgot to list a debt, even if the debt existed prior to filing, it might not be discharged.
Debt purchased by debt buyers
There is a booming industry for buyers of old debt. Oftentimes one of these buyers will purchase a pool of old debts, of which yours is one. If that happens, the debt is still discharged, as long as it doesn’t fall in one of the above categories. The debt buyer will probably back off once you explain that you filed bankruptcy.
What you can do
If you are being harassed by a creditor and you feel the debt is or should have been discharged, contact the attorney who handled your bankruptcy. Sometimes the creditor just doesn’t know about the bankruptcy and once it is advised of the fact will drop collection efforts. If the creditor persists, remedies, including fines and penalties against the creditor are available, but it has to be brought to the attention of the bankruptcy court. This usually involves re-opening your case and asking for sanctions against the creditor.