When most Colorado residents think about the bailouts given to big banks and how these same banks sometimes treat its customers a collective groan can be heard around the state. Following is a story of a regular customer attempting to take advantage of the only bailout or debt relief available to consumers, which is filing a personal bankruptcy.
Bank of America received $15 billion in federal bailout money, but when a couple filed for Chapter 7 bankruptcy and listed the bank as one of their creditors the bank violated federal law by continuing to contact the couple in an attempt to collect on the debt.
Now many people may or may not know that once a bankruptcy petition is filed, the bankruptcy court warns all creditors to cease all collection efforts or face penalties and damages, such as attorney fees. Plus, once your debt is discharged through bankruptcy the creditor can no longer attempt to collect on a debt that no longer exists. Still, Bank of America contacted the couple on 38 different occasions after they filed for bankruptcy protection.
Bank of America received a paltry $10,000 fine for these violations absorbing the fines as simply the cost of doing business. The bigger question is does this fine sufficiently deter Bank of America from illegally pursuing debt collections in the future. The answer appears to be no as the profits earned by the bulk transfer of debts and the illegal collection of those debts seems to be a far greater incentive to break the bankruptcy laws than to comply with them.
Portfolio Recovery, a debt collection company, bought more than $1.50 billion in bankruptcy debt last year, paying 9 cents for every dollar. In only the first quarter of this year the company has earned almost $80 million in fees after collecting on bankruptcy debt. And the examples of other companies which continue to profit by collecting on such debt just boggle the mind.
If you are being harassed by creditors and feel your rights have been violated, consult with a bankruptcy attorney in your area to explore options available to you to get the aggressive debt collectors off your back. Whether you decide to file for bankruptcy or find some other form of debt relief, an attorney can help you deal with abusive collectors so you can move on with your life.
Source: The Huffington Post, "Aggressive Debt Collection -- Who's in Your Wallet?," Richard Gaudreau, June 11, 2012