Can a credit card company threaten garnishment after the balance has been discharged? 18 Answers as of February 04, 2011

I have received notices from a couple of attorneys stating that they are representing a credit card company that has already charged off the existing balance. They claim that they have gone to court and received permission from a judge to begin collecting the fees plus additional legal costs for the outstanding balance on these unsecured credit cards. This seems a bit fishy to me, especially since with every "legal and formal" document they send they offer to reduce the debt if we call the 800 number and make a deal. Is this actually legal, an unsecured card coming after the person after the balance has been discharged or is this just a slicker way for collection agencies to scare people?

Ask a Local Attorney. 100% Anonymous. Free Answers.

Free Case Evaluation by a Local Lawyer: Click here
Law Offices of Michael J. Berger
Law Offices of Michael J. Berger | Michael J. Berger
If your debt was "discharged", meaning you filed for bankruptcy and included that credit card debt in your bankruptcy schedules, the credit card company may not continue pursuing collections against you. If you did not file for bankruptcy and what you meant to say was the debt was "charged-off", the credit card company can continue to pursue collection actions against you.
Answer Applies to: California
Replied: 2/4/2011
Law Office of Aaron Nielson
Law Office of Aaron Nielson | Aaron Nielson
This is a pretty normal way for a company to collect a debt. Most major banks charge off the debt on their records and then resell the debt to another person or company. Bankruptcy could be one solution. There maybe other legal options / defenses available. As always, call an attorney to discuss all of the facts in your case.
Answer Applies to: Washington
Replied: 1/24/2011
William C. Gosnell, Attorney at Law
William C. Gosnell, Attorney at Law | William C. Gosnell
No, they cannot.
Answer Applies to: Tennessee
Replied: 1/24/2011
Uriarte & Wood, Attorneys at Law
Uriarte & Wood, Attorneys at Law | Robert G. Uriarte
If you mean the debt has been "charged-off" rather than discharged in Bankruptcy the answer is yes, the creditor can attempt to collect. If, however the debt was discharged in a bankruptcy proceeding, they may not continue collection efforts. Also, check to see when the debt in question went into default and discuss with an attorney as to whether the statute of limitations bars them from commencing legal action. Good Luck.
Answer Applies to: California
Replied: 1/24/2011
Law Offices of Steven A. Wolvek
Law Offices of Steven A. Wolvek | Steven A. Wolvek
You cannot be sued and the company cannot collect on any debt that was discharged in a prior bankruptcy. In those cases, a motion for contempt can be filed with the bankruptcy court to punish the creditor after they are again notified that the debt was discharged.
Answer Applies to: California
Replied: 1/22/2011
    Gus Johnson Attorney at Law
    Gus Johnson Attorney at Law | Gus Johnson
    A creditor cannot pursue any collection activities after a debt has been discharged in bankruptcy. A creditor charging off a debt is not the same as a bankruptcy discharge.
    Answer Applies to: South Dakota
    Replied: 1/22/2011
    Judith A. Runyon, Esq. Attorney at Law
    Judith A. Runyon, Esq. Attorney at Law | Judith A. Runyon
    Charged off just means they have sold the debt to a collection account. It has not been "Discharged" as you stated, unless you filed bankruptcy.
    Answer Applies to: California
    Replied: 1/22/2011
    Law Office of L. Paul Zahn
    Law Office of L. Paul Zahn | Paul Zahn
    It sounds fishy. If a debt has been discharged by a bankruptcy court under Chapter 7, then your obligation to pay it has ended. I would strongly suggest you consult a bankruptcy attorney for assistance.
    Answer Applies to: California
    Replied: 1/21/2011
    The Law Office of Mark J. Markus
    The Law Office of Mark J. Markus | Mark Markus
    I think you are misusing legal terminology, and that is where your confusion lies. "Discharge" is a bankruptcy term. You receive a discharge of a debt after you complete a bankruptcy case. Did you file a bankruptcy? A charge-off is NOT a discharge and has absolutely nothing to do with it. A charge-off is merely a bookkeeping entry and has nothing to do with your liability on the debt or a creditor's right to collect.

    If, however, you did in fact file a bankruptcy case and receive a discharge as you allude to, then if a creditor continues to try and collect, they are in contempt of court and you can seek sanctions under 11 USC 524 with the bankruptcy court.
    Answer Applies to: California
    Replied: 1/21/2011
    Janet A. Lawson Bankruptcy Attorney
    Janet A. Lawson Bankruptcy Attorney | Janet Lawson
    This sounds like a scam. You can go after them in the bankruptcy court for doing this. Find a lawyer who know how to file an "OSC re Discharge Violation." You need to write down the date and time of all the calls you get. Look on NACBA.ORG for a lawyer near you. I did one a few years ago where the collector was trying to collect on debt that had been discharged 13 years ago. They payed my client money when when it was all over!
    Answer Applies to: California
    Replied: 1/21/2011
    Carballo Law Offices
    Carballo Law Offices | Tony E. Carballo
    There is a permanent injunction by the federal bankruptcy court upon issuance of the discharge. It means collecting any of the discharged debts is a definite no, no. It is contempt of court to do that and you can get $$$ from the bankruptcy court. It is also a violation of federal and California fair practices debt collection statutes and you would be entitled to compensation, attorneys' fees and costs for that and even punitive damages in some cases for intentional violations. If you had an attorney in the bankruptcy case you need to contact that attorney to have the bankruptcy court award you damages.

    You should first send a certified letter to whoever sends you collection notices and send a copy of your discharge. If they do it again it demonstrate intentional disregard of the discharge injunction and will get the bankruptcy judge very mad so that you can get maximum compensation. Judges don't like their orders ignored.

    You have to make sure that those debts were in your schedule of debts filed in your bankruptcy case and that notices were sent to those creditors but not necessarily to the person or company calling. Also, you must confirm that those debts were dischargeable. Some debts, such as student loans, are not dischargeable. If you can confirm that the debts were discharged and that proper notice was given to the creditor at the time you filed the bankruptcy case, then make sure you do ask the bankruptcy court to award you maximum compensation.

    Keep copies of everything and a written record of conversations including the date, times, telephone numbers and name of person with whom you spoke. Do not record any conversation without permission from the other person on the line as that is a criminal violation in California. However, you can save voicemail messages as evidence since by leaving a message the person talking is authorizing the recording. That is an excellent way to document your case if you have many calls leaving messages plus the written notices. Good luck....
    Answer Applies to: California
    Replied: 1/21/2011
    The Pedigo Law Corporation
    The Pedigo Law Corporation | Brian T. Pedigo, Esq.
    You are using the word "discharge" too loosely. "Charged off" is usually what companies do to write off a loss for tax purposes. It does not make your liability go away, however. Only a Bankruptcy discharge can rid you of your liability in the way you are using the word "discharge".

    So yes, they can attempt to collect a valid debt under your state's laws.
    Answer Applies to: California
    Replied: 1/21/2011
    Goodman, Dicus, and Teinert, LLP
    Goodman, Dicus, and Teinert, LLP | Scott W. Dicus
    Creditors whose debts have discharged may not pursue the debt further. You can assume a debt was discharged if you listed it in your bankruptcy papers, the creditor didn't successfully object to its discharge, and it doesn't fall within one of the nondischargeable categories (credit card debt usually doesn't).

    If a creditor tries to collect a debt that clearly was discharged in your bankruptcy, you should respond at once with a letter, pointing out their collection efforts violate federal law, 11 U.S.C. 524. If the collection efforts don't immediately stop, you'll likely need the assistance of a lawyer to write the creditor again and, if that doesn't work, to sue the creditor for harassment.
    Answer Applies to: California
    Replied: 1/21/2011
    DiManna Law Office, LLC.
    DiManna Law Office, LLC. | Dawn DiManna
    This does not sound right. I would demand the court paperwork.
    Answer Applies to: New Hampshire
    Replied: 1/21/2011
    Steven D. Keist, Attorney at Law
    Steven D. Keist, Attorney at Law | Steven D. Keist
    No. As long as the card was listed on your Bankruptcy Petition and you received a discharge, you cannot be contacted. You can send the attorney a copy of your discharge and a copy of the bankruptcy scheduling showing that you properly listed the debt. This should take care of the issue.
    Answer Applies to: Arizona
    Replied: 1/21/2011
    The Orantes Law Firm
    The Orantes Law Firm | Giovanni Orantes
    Your question uses the words "discharged" and "charged off". If the debt has been discharged, as in discharged in bankruptcy, they cannot try to collect from you. Whereas if the debt has simply been "charged off," the owner of the debt can still attempt to collect.
    Answer Applies to: California
    Replied: 1/21/2011
    Ursula G. Barrios Law
    Ursula G. Barrios Law | Guillermo Machado
    Yes they can garnish you (even if debt has been "charged off"). It would typically be the collection and their attorneys who sue and garnish. If you get the debt discharged in aBK, they cannot garnish. Thank you.
    Answer Applies to: California
    Replied: 1/21/2011
Click to View More Answers:
12 3 Free Legal QuestionsConnect with a local attorney