Bankruptcy Court Notices Are Not Junk Mail

Ever get mail that you don’t recognize and immediately “file” it by tossing it in the trash? If it’s a notice from the bankruptcy court, that could be a costly mistake.

As a case in point, I offer you the story of Michelle Brown (not her real name). Michelle filed for Chapter 7 bankruptcy in 2004, listing a $78 debt to her dermatologist. Michelle was an honest woman, one of the millions of Americans who file for bankruptcy protection each year owing debts to medical providers.

Remember, this was a small medical debt. Not her only one, but this particular doctor was owed only a tiny amount of money in the grand scheme of things.

When Michelle filed for bankruptcy, the dermatologist received a copy of the notice from the court. A few months later Michelle got her discharge, and the dermatologist received that notice as well. On the back of the Discharge of Debtor there was a pretty clear statement indicating that the doctor wasn’t allowed to send Michelle bills anymore.

Had the doctor’s office bothered to read the notice carefully, it could have avoided what happened next.

Each month after Michelle’s bankruptcy discharge the doctor sent bills for $78. At first, Michelle figured it was some sort of mistake and so she let it go. After awhile, though, it got under her skin. So Michelle hired a lawyer to look into the situation.

The lawyer confirmed that the dermatologist had received the bankruptcy court notices, and that this was a violation of the discharge injunction. So the lawyer sued the dermatologist in bankruptcy court, demanding damages as well as legal fees.

The dermatologist got the court notice and tossed it out.

As in all lawsuits, there is a specific time to file an Answer and defend oneself. Of course, our dermatologist friend didn’t do that - in fact, he did nothing. Stopped sending bills (finally), but not much else.

So the lawyer files papers demanding that the dermatologist be found in default and that a judgment be entered against him. The lawyer, after months of working on the file, asks the court to issue a judgment for $10,000 in punitive damages to his client and $8,500 in legal fees. He then serves the motion on the dermatologist by mail, fax and overnight mail - just to be on the safe side.

Finally, our medical friend steps into court. His defense? “I figured this was some bull***t lawsuit, and that I didn’t need to d anything.” (His words, taken directly from the court records). “The patient received services and should pay for them. What kind of country do we live in where someone can just wipe out their debts?”

It’s called America, buddy.

Good news and bad news. Bad news is that the judge didn’t give $10,000 for punitive damages against the doctor. Good news is that the judge DID give $20,000 in punitive damages, doubling the amount because of the dermatologist’s brazen audacity and cavalier attitude towards a court process.

The lesson? Open your mail, especially when it comes from the U.S. Bankruptcy Court.