You Mean I Can Actually Sue My Creditors In Bankruptcy?

25 Sep You Mean I Can Actually Sue My Creditors In Bankruptcy?

In a word, yes! A debtor in a bankruptcy case can file a lawsuit within the bankruptcy case for any number of reasons.  The lawsuit is called an adversary proceeding.

As the economy continues to struggle, the debt collection industry is also trying hard to get money out of your pocket and into theirs.  Many times, debt collectors go beyond what they are legally entitled to do.  Naturally, because bankruptcy attorneys talk with people who are facing serious issues with debt, we hear about many instances of abusive behavior by debt collectors.

Additionally, bankruptcy attorneys often see claims that can be asserted on behalf of the debtors because the mortgage servicers who take the debtors’ mortgage payments have misallocated the payments or have made errors accounting for those payments.  A claim can be asserted against the mortgage servicer for various claims under other state and federal statutes besides the United States Bankruptcy Code.

So, if you have been harassed by a debt collector and you have filed bankruptcy, you can actually file an adversary proceeding against the collector and assert any claims that you may have under the law.  Sometimes though, and depending on the state in which you live, the trustee who is assigned to your case may want to share in your good fortune if you make a recovery.  A careful analysis of your state’s exemption statute is required to determine whether the trustee is entitled to any portion of your recovery.  Also, it may make a big difference if the claim arose pre-petition (before you filed bankruptcy) or post-petition (after you filed bankruptcy).

You should discuss any potential overreaching by creditors with your bankruptcy attorney.  You may be able to not only discharge the debt but collect from the creditor for those misdeeds.

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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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