Post-Bankruptcy Collection

Your Debts Are Supposed To Be Gone

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If you have received a bankruptcy discharge, your creditors cannot legally attempt to collect the debts that were included in your discharge.  But there are businesses out there that may still try to collect money from you illegally.

For example, some creditors illegally sell debts that have been discharged in bankruptcy.

Click on the Business Week article to the right for more information about how often creditors sell discharged debt to other entities who then go after the consumer for the money!


Don’t fall for this scam!  The buyer of the discharged debt or “new” creditor may contact you and tell you the bankruptcy discharge doesn’t apply to them because they were not included in the bankruptcy filing.  This is NOT true.  You no longer owe a debt that was discharged in bankruptcy and no one is allowed to collect on it!

Another way companies try to pressure you to pay discharged debts is to report the debt as still owing on your credit report.  So when you apply for credit at some point down the road, the creditor may try bullying you into paying the discharged debt so the application for new credit goes through.

Click here for information on what your credit report should look like after you’ve received a bankruptcy discharge.

HELPFUL HINT:  If you have been contacted by a creditor or collection agency about a debt that has been discharged in bankruptcy, or if discharged debts continue to appear as owing on your credit report, then you may be able to recover money from that entity for its illegal conduct!

Did You Know?  No creditor or debt collector is allowed to contact you about a debt that was discharged in your bankruptcy.  If you have been getting any letters or phone calls trying to bully you into paying for a debt that is shown on your Discharge Order (whether it’s the original creditor or a new debt collector), the companies contacting you are violating the law!

What to Watch Out For:

No Collection Allowed.  Watch out for anyone who tries to get you to pay a debt that was discharged in your bankruptcy!

Keep a copy of your Discharge Order handy so you can easily check which debts were discharged by the court.

Make a list of all telephone calls you receive about any debts.

Save all collection letters you get.

Check Your Credit Report.  Make sure your credit report doesn’t make it look like you still owe your discharged debts.

Each discharged debt on your credit report should note your bankruptcy, and there should be no current balance. Otherwise it looks like you still owe these debts, and your credit rating will be even worse than it should.

None of your former creditors (or their debt collectors) should be pulling your credit report.  Unless you applied for credit from one of these creditors since your discharge, they have no business peering into your finances!

Reestablishing your credit after bankruptcy is going to take time – so you need to start thinking about your financial future now!

Be patient!

Time heals all wounds with credit ratings.  By applying for credit, using it responsibly, and regularly checking that your credit report is correct, you should be able to rebuild your credit rating much sooner than you would think!

Step 1:         Apply for credit.  Don’t assume that filing bankruptcy destroyed your ability to get new credit.  Plenty of lenders are willing to take a risk on you since your “fresh financial start” has erased the previous strains on your income.

Start Small.  Apply for a gas card or store card.  They usually come with a small credit limit and relatively high interest rate, but you have to start somewhere.

Use Responsibly.  Use the card on a regular basis, charging only small amounts that you know you can pay off in full each month or in a relatively short period of time.  This shows you can handle credit responsibly.

Step 2:      Build up over time.   After a few months, apply for a sub-prime Visa or Mastercard offered by banks that cater to post-bankruptcy consumers.  You can expect high interest rates, possibly an annual fee, and the credit limit will probably still be low.  But you are rebuilding, and this is temporary.  Make sure to use the card responsibly:  charge regularly in small amounts that you pay off in full each month or in a short period of time.

Upgrade.  After you have responsibly used your other cards for about a year, apply for a more conventional card with better terms.

Step 3:        Check your credit report.  It’s impossible to rebuild your credit rating if your bankruptcy and all of the accounts included in it are not shown correctly on your credit report.  Check your report regularly to make sure everything is reported right.  Turn this card over for more information on how your credit should look after bankruptcy.


Your Credit After Bankruptcy

If you filed bankruptcy, you should request a copy your credit report about 6 months or so (or more) after your debts have been discharged to make sure everything is being reported the way it should.  Otherwise, you may not be getting the “fresh financial start” you thought you were.

For information on how to request your free credit report, click here.

To view a Sample Post Bankruptcy Dispute Letter, please click here.

Did You Know? Bankruptcy may lower your credit score on average by 100 points.  However, depending on how much debt you were carrying before you filed, your bankruptcy may actually increase your credit score slightly (if your individual accounts are properly reported).

What Your Credit Report Should Look Like
(Click here for information on how to read your credit report.)

Public Records.  Your Bankruptcy filing will appear in the Public Records section of your report.  A Chapter 7 filing may remain for 10 years.  A Chapter 13 filing may remain for 7 years.

Individual Accounts.  Each account included in your bankruptcy will still show on your credit report, and may remain there for 7 years from the date it first became significantly delinquent. These accounts should indicate that they were included in bankruptcy, and there is no current balance.

Debt Collection Accounts.  Even if a debt was sold to a debt collector, that information must be removed at the same time as the original debt.

Inquiries.  None of your former creditors (or their debt collectors) should be pulling your credit report.  Pulls of your credit report usually appear at the end of the report and will provide the date the inquiry was made.