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Debts erased in bankruptcy are no longer subject to debt collection

When Florida residents have accumulated unmanageable debt, one option is to seek bankruptcy protection. By filing for bankruptcy, lenders and debt collectors will be subject to the bankruptcy rules regarding the debt owed.

This means that if someone filed for Chapter 7 bankruptcy and his or her debts are discharged, then the lender can no longer sue for the unpaid balance on any discharged debts. Unfortunately, lenders can be very aggressive in their pursuit of payment, even to the point of violating the law.

Capital One Financial Corp. is one of the nation's largest credit card companies. The company has recently been accused of violating federal bankruptcy law by pursuing a debt owed by a woman who had already discharged her debts in bankruptcy. When the credit card company tried to sue the woman, she fought back and filed a lawsuit against the company for violating bankruptcy law.

Interestingly, this is not the first time that Capital One has tried to do this. In fact, Capital One has been involved in more than 15,000 such bogus claims of money that has already been erased by bankruptcy. Only 800 of those who have been the subject of these erroneous claims have filed legal actions against Capital One.

This type of debt collection practice by Capital One is illegal. Lenders are not allowed to even attempt to collect on debts once they have been discharged in bankruptcy.

It is very hard to believe that these kinds of systemic debt collection practices by credit card companies are legitimate mistakes, and are not done as a matter of unethical business practices.

Is it possible that Capital One really did not know that these debts were discharged, or did they simply not care? Is it enough for Capital One to simply say that it made a mistake?

Thousands of people are facing these kinds of illegal and intimidating debt collection practices. If you are one of them, you can avoid being the victim of unfair debt collection practices by seeking help to protect your rights.

Source: Wall Street Journal, "Debts Go Bad, Then It Gets Worse," Jessica Silver-Greenberg, Dec. 23, 2011

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