February 3, 2015

When you file for bankruptcy and your debts are discharged, your credits cannot continue to call you and cannot try to collect from you.

Loan Servicers cannot continue with their attempts to obtain payments on mortgages after a discharge in Bankruptcy.

The 11th U.S. Circuit Court of Appeals held in a case that creditors that violate the discharge injunction can be held liable under courts’ inherent contempt powers as well as the statutory powers provided them under Section 105.   In other words, courts can award damages for willful violations of bankruptcy discharges.

When a creditor has been informed of a Bankruptcy yet still attempts to collect on that debt and their conduct continues in trying to collect, the Court has found that the Creditors’ actions are willful.    Creditors’ subjective beliefs or intent are not relevant in the court.

When a bankruptcy court finds that a creditor has willfully violated the discharge injunction, it can award actual damages in the form of attorney fees, emotional distress damages and/or punitive damages.

Recently, Bayview Loan Servicing LLC was found guilty of violating the bankruptcy discharge rules and was assessed damages:  $112,465 in actual damages and an identical amount in punitive damages for a total of $225,000.

You have rights when you file for bankruptcy.   Don’t let creditors take advantage of you.

Know your rights.