1. Home
2. Bankruptcy Articles
3. Life After Bankruptcy

FAQ'S

Life After Bankruptcy

1. What will my life be like after I receive my bankruptcy discharge?

After you receive your final discharge, you can then live your life again and enjoy a fresh start. Moreover, you will also have to rebuild your credit. Unfortunately, not all  of your debt collection activity will stop after you file. You may have to take action if:

* A creditor tries to collect a non-dischargeable debt.

* A creditor tries to collect a debt that has been discharged in your bankruptcy.

* A government agency or private employer discriminates against you because of your bankruptcy.

This set of FAQ’S will explain to you how you can live your life after your bankruptcy case is over with.

2. I recently discovered that I forget to list two creditors in my bankruptcy. What can I do now?

This type of mistake happens all of the time. Many of my clients frequently forget to list a creditor or two on their case. The most important part of any bankruptcy case is to make sure that your paperwork is complete and accurate as it can be. If your paperwork is a messen then your case can turn into a disaster. Suppose you don’t become aware of your omission until your bankruptcy is closed. Does that mean that the debt survives your bankruptcy. No, the debt can still be discharged. However, you will have to file an application with the bankruptcy court to reopen up your case. If the bankruptcy court grants your application to reopen up your case, then you can amend your schedules and add any omitted creditor and debt. This legal process can be very expensive. The filing fees to file an application to reopen a bankruptcy are expensive and it is $250. Moreover, the legal fees are also high to file an application to reopen. The legal work to reopen up a case is often more tedious than preparing the entire bankruptcy case. Therefore, all debtors must perform their due diligence and make certain that all of their debts are listed.

3. The credit card companies are still calling me after my case is over. What can I do to stop all of these never ending collection calls?

After your bankruptcy is over any of your creditors whose debts have not been discharged are still entitled to be paid. Therefore, these creditors can still undertake any and all actions to collect their debts. However, any of your creditors whose debts have been discharged may not undertake any additional collection efforts. Nonetheless, it is not always clear into which category a creditor falls into. The bankruptcy court doesn’t give you an itemized list of your discharged debts. Instead, your final discharge paper merely explains the types of debts that are discharged in very general terms. The discharge order is simply a generic form, and it does not explain which of your debts were wiped out, and which of your debts are still legally valid. Because of this lack of specificity, it can be very difficult to figure out whether a particular debt has been wiped out.

In summary, in this day and age consumer debt is transferred and sold repeatedly countless times. The consumer creditors deal with millions of accounts on a daily basis. Many of these creditors can’t keep track of  all of their accounts. Most consumer creditors don’t knowingly violate the bankruptcy laws if they contact you after your bankruptcy is over. Moreover, many consumer debts are transferred to third parties, or these debts are purchased again and again. The buying and selling of consumer debt is a massive  billion dollar business. Many companies will buy bad consumer debt. If these companies can ultimately collect on bad debt, then they can make a huge profit. Thus, given the culture of consumer debt, it is often very difficult for an average debtor to really know who his creditor actually is. However, after the bankruptcy process is finished,  a debtor should make about 50 copies of his discharge order. If any creditor calls then the debtor should ask for their address, and then send it a copy of the discharge. Eventually, all of the creditors will fade away. The creditors will not go away immediately. However, if you follow this process, then in six months you won’t receive any more collection calls or letters.

4. How do you know which debts have been discharged and which debts must still be paid?

The general rule is that all of your debts that were listed in your bankruptcy papers are discharged. However, if a creditor successfully objected to the discharge of a particular debt in the bankruptcy court then that debt is not wiped out. Moreover, a debt will not be discharged if it falls into one of the following categories:

a.  student loans (unless you obtained a court ruling that it would be an undue hardship for you to repay them)

b. taxes that became due within the past three years or that were assessed within the previous 240 days

c. debts you took on to pay non-dischargeable taxes

d. child support or alimony

e. fines and penalties or court fees

f. debts related to personal injury or death caused by your intoxicated driving

g. debts not discharged in a previous bankruptcy because of fraud or misfeasance

h. certain condominium and cooperative fees incurred after your filing date, or

i. loans you took out from a retirement fund.

5. What type of action should I take if an omitted creditor tries to collect a debt from me?

Even if you think some of your debts were not discharged in your bankruptcy these creditors may never try to collect these debts again. Many creditors mistakenly believe that your bankruptcy does not cut off their legal rights to go after you. If a creditor does try to collect a debt after your bankruptcy discharge, then you should write to that creditor, and explain that your debts were discharged even if you are not sure. Moreover, you should enclose a copy of your discharge order.

Thereafter, if your omitted creditor still ignores your letter and continues collection efforts, then there are still other ways to respond;

a. Amend your bankruptcy papers. Remember that an unlisted debt is discharged in a no-asset case, unless the creditor was deprived of a chance to oppose the debt’s discharge. You can reopen the bankruptcy, amend your papers to list the debt, and then see what the creditor does.

b. Do nothing. The creditor knows you’ve just been through bankruptcy, have little or no nonexempt property, and probably have no way to pay the debt, especially all at once. Thus, if you don’t respond to collection efforts, the creditor may decide to leave you alone, at least for a while.

c. Try to get judgments wiped out. If a creditor sued you and obtained a judgment against you before you filed for bankruptcy, then the creditor may try to collect on that judgment, unless you can convince a state court that the judgment was discharged in bankruptcy. Creditors can try to enforce judgments years after they obtained them, so it is advisable for you to reopen the case.

d. Negotiate. Try to negotiate for a lower balance or a payment schedule that works for you. Again, the creditor knows you have just been through bankruptcy and may be willing to compromise.

e. Defend in court. If the creditor sues you for the debt, you can raise any defenses you have to the deb itself.

f. Fight the garnishment or other judgment collection efforts.

6. What should I do if my creditor still attempts to collect a debt that was discharged?

If a creditor still tries to collect a debt that was discharged in your bankruptcy then you should send him a letter to advise it that you have filed for bankruptcy. Moreover, the letter should also enclose a copy of your discharge order. After a fair warning, if the collection efforts don’t immediately stop, then you should contact your bankruptcy lawyer. Thereafter, your bankruptcy lawyer can threaten to sue your creditor for violating the bankruptcy laws. The bankruptcy court has the power to hold the persistent creditor in contempt of court. The court also may impose a fine on the creditor.

7. Can you please provide a sample letter that I can send to my persistent creditors who still hound me?

Re: Bankruptcy of Danny Deadbeat

Dear Mr./Mrs. Creditor:

On March 1, 2008, I filed for a chapter 7 bankruptcy. I have listed your debt on my schedule  F as an unsecured creditor. I was forced to file for bankruptcy because I loss my job, and I could no longer afford to my all of my bills. I am sorry that I could not pay your debt.

As you are well aware, the above referenced debt was discharged in the New Jersey Bankruptcy Court on September 1, 2008. Thus, your collection efforts violate federal law, 11 U.S.C. 524. If you continue to try to collect this discharged debt, then I will be forced to pursue my legal rights, including bringing a lawsuit against you for the violation of the bankruptcy laws. I am deeply sorry for any aggravation and financial losses that I have caused you. However, in these economic times, I had no other choice but to file for bankruptcy. Thank you for your anticipated cooperation. I remain.

Sincerely yours,

Danny Deadbeat

8. Can the government discriminate against me if I file for bankruptcy?

Although declaring bankruptcy has some serious consequences, it might not be as bad as you believe it is. There are many laws that will protect you form most types of post-bankruptcy discrimination by the government and by private employees. All federal, state, and local governmental units are barred from denying, revoking, suspending, or refusing to renew a license, permit, charter, franchise, or other similar grant solely because you filed for bankruptcy. This part of the Bankruptcy Code provides important protections, but it does not insulate debtors from all adverse consequences of filing for bankruptcy. Lenders, for example, can consider your bankruptcy filing when reviewing an application for a government loan or extension of credit.

Under this provision of the Bankruptcy Code, the government can’t use your bankruptcy as a reason to:

• deny you a job or fire you
• deny you or terminate your public benefits
• evict you from public housing
• deny you or refuse to renew your state liquor license
• withhold your college transcript
• deny you a driver’s license, or
• deny you a contract, such as a contract for a construction project.

In addition, the Bankruptcy Code bars lenders from excluding you from government-guaranteed student loan programs. (11 U.S.C.  525(c).)

In general, once any government-related debt has been discharged, all acts against you that arise out of that debt also must end.  For example, if you have lost your driver’s license because you didn’t pay surcharges, then the MVS must restore your license even if you still owe the surcharges. Surcharges are not dischargeable in a chapter 7. However, the majority of surcharges can still be wiped out in a chapter 13 case.

It is important to emphasize that only government denials based on your bankruptcy is prohibited. You may be denied a loan, job, or apartment for reasons unrelated to the bankruptcy. This includes denials for reasons related to your future creditworthiness-for example, because the government concludes you won’t be able to repay a Small Business Administration loan.

9. Can I be discriminated in other areas of my life because I have filed for bankruptcy?

Private employers may not fire you or otherwise discriminate against you solely because you filed for bankruptcy. (11 U.S.C.  525(b).) While the law expressly prohibits employers from firing you, it is unclear whether the act prohibits employers from refusing to hire you because you went through bankruptcy.

Unfortunately, there are other forms of discrimination in the private sector that are not illegal. If you seek to rent an apartment and the landlord does a credit check, sees your bankruptcy, and refuses to rent to you, then there is not much you can do other than try to show that you’ll pay your rent and be a responsible tenant. It is often helpful if you can pre-pay your rent for a few months, or, if it is permitted under your state’s laws, provide a bigger security deposit. However, if you file for bankruptcy in the midst of a lease, your landlord cannot use this as grounds to evict you before the lease term is up.

If a private employer refuses to hire you because of a poor credit history not because you filed for bankruptcy you may have little recourse. If you suffer illegal discrimination because of your bankruptcy, you can sue in state court or in the bankruptcy court. However, you will most definitely need the assistance of an attorney.