Asked in Bankruptcy for Mississippi

Q: Can I sue a creditor that keeps contacting me for payment after being notified the debt was included in bankruptcy?

I filed chapter 7 in 2019. A utilities provider has been contacting me for payment after I provided them with documentation showing their account was included in bankruptcy. It is my understanding this is illegal debt collection activity and I'd like to know if it would be beneficial to take this up with small claims court. I believe I can request $1000 per incident, if so, would it count as 3 incidents or 2? My thoughts are that it is 3 separate incidents: 1)They were already notified of the bankruptcy prior to sending me the letter validating the debt and 2) requesting payment in the validation letter. 3) After I provided them with the bankruptcy documentation, they sent me another letter validating the debt again and once more requesting payment.

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1 Lawyer Answer
W. J. Winterstein Jr.
W. J. Winterstein Jr.
  • Bankruptcy Lawyer
  • Boyertown, PA

A: Until recently, any creditor who attempted to collect, by phone calls, statements by mail, or otherwise, any debt that was discharged in bankruptcy would almost certainly be sanctioned (made to pay money to the debtor) by the bankruptcy court.

Last year, the US Supreme Court revised that rule, so that if a creditor asserts some other reason for sending an invoice, or otherwise contacting you, that activity may not be sanctionable, i.e., a willful violation of the stay (or "permanent injunction" entered after entry of a discharge). In effect, the Supreme Court put the evidentiary burden on the debtor to prove that the primary reason for the creditor's efforts is to collect a discharged debt, and that's a heavy burden of proof. For example, often, in recent years, banks and other creditors will insert language on a monthly statement that claims that the invoice is for informational purposes if the debtor has filed a bankruptcy. That was the factual setting in the US Supreme Court case, and the sanctions imposed by the bankruptcy court was overturned.

The remedy is still in effect, if a willful violation can be shown by the debtor, but it's more difficult to do now.

If you and your lawyer want to go after the creditor, you should file a motion to reopen the bankruptcy case and then file your complaint in that court.

Timothy Denison agrees with this answer

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