Bankruptcy and the FDCPA

04 Apr Bankruptcy and the FDCPA

There are two very important statutes that serve to protect consumers from some of the consequences of too much debt. The first is the United States Bankruptcy Code. Obvious enough since this is the Bankruptcy Law Network. The other statute is the Fair Debt Collections Practices Act or FDCPA. Both statutes individually can help consumers but when you combine the two, that is when some really good things can happen.

First,the Bankruptcy Code allows for the discharge of certain types of indebtedness. If you find yourself struggling with credit card debts or other types of debts, a bankruptcy filing may be appropriate. Depending on your situation (and you should always consult with experienced bankruptcy counsel), a bankruptcy filing can help restore your personal finances by discharging unsecured debts and/or reducing the amount that you pay on certain secured debts. Because you potentially are paying less money for certain secured debts such as automobiles and less on unsecured debts such as credit cards, this frees up more money so that you can meet your monthly expenses. Often times, if you are struggling with certain bills such as a credit card, a bankruptcy filing offers a more global, comprehensive, and often, inexpensive, solution to debt problems.

The second statute is the Fair Debt Collections Practices Act or FDCPA. The FDCPA regulates how debt collectors may go about attempting to collect any debts that are claimed owed. For example, the FDCPA prohibits a debt collector from making false or misleading statements in any attempt to collecta debt. the FDCPA further prohibits any harassment or abuse such as using obscene for profane language in talking with the consumer or by causing a telephone to ring repeatedly with the intent to annoy, abuse or harass any person at the called number. There are also requirements that a debt collector must meet and provide information to the consumer about the debt upon request. It is a comprehensive statute and violations of the FDCPA can result in the consumer being awarded actual damages and statutory damages of up to $1,000.00 plus attorney’s fees.

Often consumers who are contemplating a bankruptcy filing are behind in their debt payments. A lot of times consumers who are contemplating bankruptcy are being subjected to numerous collection calls and other collection attempts prior to actually filing bankruptcy. These collection attempts may violate the FDCPA for which the consumer can sue the creditor and recover their actual damages and statutory damages.

While a violation of the FDCPA does not mean that the underlying debt is extinguished, by pursusing FDCPA in connection with a bankruptcy filing, you can utilize the Bankruptcy Code as a shield to protect yourself from the consequences of the debt while using the FDCPA as a sword to strike back at debt collectors who are engaging in abusive practices.

But, before embarking on using both statutes, you should be sure that your attorney is experienced in using both statutes. If you file an FDCPA case while you are in your bankruptcy case, you want to make sure that your bankruptcy attorney has “exempted” the FDCPA claim if you want to recover any of your damages. Otherwise, the trustee assigned to your bankruptcy casemay have his hand out to recover those damages asa pre-petition claim is an asset of the bankruptcy estate.

If you follow these steps and appropriately document anypotentia debt collection abuses, you can literally have certain creditors “pay” for your bankruptcy case because you will recover money from your creditors to possibly pay or recoupthe legal fees paid to your bankruptcy attorney.

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Adrian Lapas, Esq.

I've been practicing bankruptcy law in North Carolina since 1993, and am certified as a specialist in consumer bankruptcy law by the North Carolina State Bar.
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