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Collection efforts while under bankruptcy protection may be legal

On Behalf of | Oct 13, 2016 | Chapter 7 |

A case currently before the Supreme Court will address how debt is collected and the practices that collection agencies are allowed to use. This case stems from a situation in which a woman was expected to pay over $1,800 on a bill long after the statute of limitations had expired. The court will decide whether people already under bankruptcy protection can sue companies for seeking payment on debts after the statute of limitations has expired.

Maryland readers will note that the company that brought the case before the Supreme Court tried to collect on a bill that was more than 10 years old. The person who owed the balance filed for bankruptcy in 2014. Apparently, it is a rather common practice for debt collection companies to buy debt for pennies on the dollar, then immediately attempt to collect it, even if it is not legally recoverable.

Even if it is well past the expiration of the statute of limitations, the debtor must object to this attempt to collect the old debt. Otherwise, he or she could be liable for it, even if that person is under Chapter 7 or Chapter 13 bankruptcy protection. Debt collection companies state that they are legally permitted to do this according to United States bankruptcy law.

Debt can haunt a Maryland resident, even years or decades later. When debt cannot be paid or there are threats of foreclosure, repossession or wage garnishment, it is wise to seek the help of an experienced bankruptcy attorney. Bankruptcy protection is intended to protect an individual from collections efforts, and it is hoped that the Supreme Court will rule in favor of those who have chosen to take this legal step.

Source:, “Supreme Court to Hear Debt Collection Lawsuit Arguments”, Lawrence Hurley, Oct. 12, 2016

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