Friday, October 18, 2013

How to Stop Collections After Bankruptcy

By Michael Fuller, Portland Trial Attorney

The discharge injunction generally prohibits collection of debts included in your bankruptcy.

Creditor harassment after bankruptcy is common because debt collectors know the discharge injunction is rarely enforced. Read more about why companies continue to collect discharged "zombie debts" at How Stuff Works.

In addition to direct demands for payment, companies frequently violate the discharge order by:

- renewing judgments and garnishing wages after bankruptcy
- furnishing false credit report information after bankruptcy
- assigning and selling discharged debts to third party debt collectors after bankruptcy
- refusing to return vehicle titles after bankruptcy
- continuing to automatically withdraw payments from bank accounts after bankruptcy

This post explains how to stop creditor harassment after bankruptcy and protect your discharge.

Step One - Write a Letter

If you're the victim of a discharge violation and you know the collector's address, consider writing a simple letter.

Send the letter by certified mail and include a copy of the court-generated discharge order from your bankruptcy case. See the sample below:

Bank of America and FIA Card Services ignored this letter and later assigned the discharged debt back and forth between different debt collectors. The judge in the consumer's bankruptcy case eventually entered an order to show cause why the companies shouldn't be held in contempt.

Step Two - Consider Small Claims Court

Collectors often ignore letters (even certified letters from attorneys, as in the case above). When a simple letter won't work, consider small claims court.

Debt collectors must follow certain rules pursuant to the Fair Debt Collection Practices Act (FDCPA). Browse the FDCPA full searchable text at the end of this post.

But before you march to the courthouse, find out which of the 94 United States districts your bankruptcy was filed in using the Department of Justice's district locator.

Can a violation of the bankruptcy discharge injunction result in a small claims court lawsuit under the FDCPABased on published opinions, the answer is "yes" in 26 districts, "no" in 16 districts, and "unclear" in 52 districts.

After you know your district, use the list below to determine if you can file a small claims lawsuit under the FDCPA for violations of the discharge injunction.

The following cases say "yes", a consumer can generally sue a debt collector under the FDCPA for collecting discharged debt: Arruda v. Sears, Roebuck & Co., 310 F.3d 13 (1st Cir. 2002); Simon v. FIA Card Services, N.A., No. 12-3293, 2013 WL 5508868 (3d Cir. Oct. 7, 2013); Dougherty v. Wells Fargo Home Loans, Inc., 425 F. Supp. 2d 599, 604–06 (E.D. Pa. 2006); Gamble v. Fradkin & Weber, P.A., 846 F. Supp. 2d 377, 381–83 (D. Md. 2012); In re Contreras, 2007 WL 273128 (Bankr. S.D. Tex. Jan. 26, 2007); Evans v. Midland Funding LLC, 574 F. Supp. 2d 808, 816–17 (S.D. Ohio 2008); Randolph v. IMBS, Inc., 368 F.3d 726 (7th Cir. 2004); Clark v. Brumbaugh & Quandahl, P.C., LLO, 731 F. Supp. 2d 915, 919–21 (D. Neb. 2010); Bagwell v. Portfolio Recovery Associates LLC, 2009 WL 1708227 (E.D. Ark. June 5, 2009); Atwood v. GE Money Bank (In re Atwood), 452 B.R. 249, 251–53 (Bankr. D.N.M. 2011); In re Peed, 2012 WL 1999485 (Bankr. S.D. Ala. June 4, 2012); Bacelli v. MFP, Inc., 729 F. Supp. 2d 1328, 1336–37 (M.D. Fla. 2010); Rios v. Bakalar & Assocs., P.A., 795 F. Supp. 2d 1368, 1369–70 (S.D. Fla. 2011).

The answer is generally "yes" in the District of Maine, the District of Massachusetts, the District of New Hampshire, the District of Puerto Rico, the District of Rhode Island, the District of Delaware, the District of New Jersey, the Eastern District of Pennsylvania, the Middle District of Pennsylvania, the Western District of Pennsylvania, the District of Maryland, the Southern District of Texas, the Southern District of Ohio, the Central District of Illinois, the Northern District of Illinois, the Southern District of Illinois, the Northern District of Indiana, the Southern District of Indiana, the Eastern District of Wisconsin, the Western District of Wisconsin, the District of Nebraska, the Eastern District of Arkansas, the District of New Mexico, the Southern District of Alabama, the Middle District of Florida, and the Southern District of Florida.

The following cases say "no", a consumer cannot generally sue a debt collector for violation of the discharge orderNecci v. Universal Fid. Corp., 297 B.R. 376, 379–81 (E.D.N.Y. 2003); Degrosiellier v. Solomon & Solomon, PC, 2001 WL 1217181, 2001 U.S. Dist LEXIS 15254 (N.D.N.Y. 2001); Burchalewski v. Wolpoff & Abramson, LLP, 2008 WL 4238933 (W.D.N.Y. Sept.8, 2008); Walls v. Wells Fargo Bank, N.A., 276 F.3d 502 (9th Cir. 2002).

The answer is generally "no" in the Eastern District of New York, the Northern District of New York, the Western District of New York, the District of Alaska, the District of Arizona, the Central District of California, the Eastern District of California, the Northern District of California, the Southern District of California, the District of Hawaii, the District of Idaho, the District of Montana, the District of Nevada, the District of Oregon, the Eastern District of Washington, and the Western District of Washington.

Step Three - Consult an Attorney

Before filing anything, speak with a consumer protection attorney in your area. If you filed bankruptcy through a law firm, consider reaching out to it for advice.

My third-favorite fictional attorney, Lionel Hutz, who reminds us that not all lawyers are created equal. Research various attorneys in your area using the National Association of Consumer Advocates attorney locator.

Even if you live in one of the "no" districts above, you might be able to bring a lawsuit for violations of the FDCPA that don't necessarily involve your bankruptcy. For instance, if a debt collector calls you after 9 PM local time to collect a discharged debt, it's likely violated 15 USC § 1692c(a)(1) of the FDCPA, independent of the fact that the debt is discharged.

The following cases support this approach: Walch v. Columbia Collection Service, Inc., 2012 U.S. Dist. LEXIS 132281, *8 (D. Or., June 19, 2012) (Hubel, M.J.), adopted, slip op., 2012 U.S. Dist. LEXIS 132280 (D. Or., Sept. 17, 2012) (Mosman, J);  Church v. Onewest Bank FSB, slip op., 2011 U.S. Dist. LEXIS 68718 (D. Or. Jan. 18, 2011) (Hubel, M.J.), adopted, slip op., 2011 U.S. Dist. LEXIS 63635 (D. Or. June 15, 2011) (Haggerty, J.); Goad v. MCT Group, 2010 WL 1107257 (S.D. Cal. Apr. 6, 2010); Burchalewski v. Wolpoff & Abramson, LLP, 2008 WL 4238933 (W.D.N.Y. Sept. 8, 2008).

You might also be able to bring a lawsuit in a "no" district if you're alleging violations of the automatic stay, as opposed to the discharge injunction. The automatic stay under 11 USC § 362 protects you during bankruptcy. The discharge injunction under 11 USC § 524 protects you after bankruptcy.

The following cases support this approach: In re Tobener, 2009 WL 5215404 (Bankr. N.D. Cal. Dec. 28, 2009); Atwood v. GE Money Bank (In re Atwood), 452 B.R. 249, 251–53 (Bankr. D.N.M. 2011).

But see: In re Stoiber, 2008 WL 2473657 (Bankr. D. Or. June 18, 2008); Wan v. Discover Financial Services, Inc., 324 B.R. 124 (Bankr. N.D. Cal. 2005).

Step Four - Hire an Attorney

If at all possible, skip steps one through three and immediately hire a consumer protection attorney to enforce your rights.

My favorite fictional attorney, Vincent LaGuardia Gambini.

Find an attorney who focuses on consumer bankruptcy litigation and FDCPA lawsuits.

Your attorney may be required to re-open your bankruptcy case under 11 USC § 350 and file a contempt motion under 11 USC § 524 and Federal Rule of Bankruptcy Procedure 9020.

While you may have to attend a court hearing, you should be able to stop the harassment and recover your damages and attorney fees. See the examples below.

After bankruptcy in 2012, CitiFinancial refused to release a consumer's title so she could dispose of her vehicle. 
 CitiFinancial later admitted that it violated the discharge injunction and agreed to turnover the title and pay the consumer $5,000 emotional harm damages. In re Lowden, Case No. 6:12-mc-00416-AA (D. Or. Nov. 27, 2012). See also In re Pratt, 462 F.3d 14 (1st Cir. 2006) and In re Groth, 269 B.R. 766 (Bankr. S.D. Ohio 2001).
After bankruptcy in 2013, debt collector Asset Management renewed its judgment against a consumer and attempted to garnish her wages based on a discharged debt.
Asset Management later admitted that it violated the discharge injunction and agreed to pay the consumer damages, donate money to her church, and reimburse her attorney fees. In re Reese, Case No. 03-36705-elp7 (Bankr. D. Or. Oct. 11, 2013).
After bankruptcy in 2012, creditor Tan Republic continued to automatically withdraw payments from a consumer's bank account. The consumer's case discharged and Tan Republic refused to return the funds it collected.
Tan Republic later admitted that it violated the bankruptcy rules and agreed to return the money it collected, apologized, and reimbursed the consumer $10,000 in attorney fees. Thompson v. Tan Republic, Case No. 12-03316-tmb (Bankr. D. Or. Mar. 29, 2013).
After bankruptcy in 2011, Wells Fargo harassed a consumer on the phone over 100 times, despite the consumer's various verbal and written requests to stop.
Wells Fargo was ultimately held in contempt of the discharge injunction and ordered to pay over $35,000. See In re Culpepper, 481 B.R. 650 (Bankr. D. Or. 2012). The case is now on appeal before the Ninth Circuit Court of Appeals.
After bankruptcy in 2012, Bank of America continued to report false credit information about a discharged mortgage debt.

Bank of America ignored various written requests from the consumers' attorney and inexplicably did not appear at its own show cause hearing. The Judge held the bank in contempt of the discharge injunction and ordered it to pay over $25,000. The matter later settled and the order was vacated. See also In re Torres, 367 B.R. 478, 486 (Bankr. S.D.N.Y. 2007).
After bankruptcy in 2011, Columbia Collection harassed a consumer to pay discharged debt and ultimately garnished his wages. 
Columbia Collection later admitted it violated the discharge injunction and was ordered to pay over $25,000. See Walch v. Columbia Collection Service, Inc., 2012 U.S. Dist. LEXIS 132281, (D. Or., June 19, 2012); In re Walch, Case No. 12-03237-elp (Bankr. D. Or. Nov. 15, 2012).

Commentary
The Supreme Court undermined Walls v. Wells Fargo's continued viability through its 2011 Stern v. Marshall opinion. 564 U.S. ___, 131 S. Ct. 2594 (2011).

In Stern, The Supreme Court held a bankruptcy judge lacked authority to enter judgment on the Smith estate's counterclaim because it wouldn't necessarily be resolved in the process of ruling on the Marshall estate's proof of claim. Whether a bankruptcy judge can enter a contempt order against a debt collector having nothing to do with a closed "no-asset" case, years after the fact, as Walls proscribes, is doubtful after Stern.

In light of SternRandolph vs. IMBS provides a far more workable approach to § 524 enforcement than Walls. The Ninth Circuit has already recognized that Stern makes long-held bankruptcy authority untenable in other contexts. See, e.g., In re Bellingham Ins. Agency Inc., 2012 WL 6013836, fn. 5 (9th Cir. Dec. 4, 2012) (overruling In re Mankin, 823 F.2d 1296 (9th Cir. 1987) because its result could no longer be reconciled with the reasoning in Stern).

Stern issues aside, the vast majority of federal judges continue to disfavor the Walls approach because of the loophole it creates for "zombie debt" collectors.

For example, a debt collector can't violate the discharge injunction if it doesn't know a consumer filed bankruptcy. See In re Cultrera, 360 B.R. 28 (Bankr. D. Conn. 2007); In re Franks, 363 B.R. 839 (Bankr. N.D. Ohio 2006). And the FDCPA doesn't require third party collectors to verify whether consumers have filed bankruptcy before collecting. See Hyman v Tate, 362 F.3d 965 (7th Cir. 2004).

Thus, discharged "zombie debt" is collected with impunity under Walls, and creditors ping-pong discharged accounts between various third parties with little consequence.

Published authority holding creditors liable under 11 USC § 524 for the acts of third party collectors is limited. See In re Laboy, 2010 WL 427780 (Bankr. D. P.R. Feb. 2, 2010); In re Nassoko, 405 B.R. 515 (Bankr. S.D.N.Y. 2009); In re Faust, 270 B.R. 310 (Bankr. M.D. Ga. 1998); In re Lafferty, 229 B.R. 707 (Bankr. N.D. Ohio 1998).

For a case in point, see this post about Bank of America and FIA Card Services scheme to illegally circumvent the Bankruptcy Code by assigning discharged debt to various third party collectors.

In the event of another government shutdown of the FTC website, below is the full searchable text of the FDCPA, as updated May 2013.

Fair Debt Collection Practices Act FDCPA Full Searchable Text


Table of Contents


Short title [15 USC § 1601 - § 801]
Congressional findings and declaration of purpose [15 USC § 1692 - § 802]
Definitions [15 USC § 1692a - § 803]
Acquisition of location information [15 USC § 1692b - § 804]
Communication in connection with debt collection [15 USC § 1692c - § 805]
Harassment or abuse [15 USC § 1692d - § 806]
False or misleading representations [15 USC § 1692e - § 807]
Unfair practices [15 USC § 1692f - § 808]
Validation of debts [15 USC § 1692g - § 809]
Multiple debts [15 USC § 1692h - § 810]
Legal actions by debt collectors [15 USC § 1692i - § 811]
Furnishing certain deceptive forms [15 USC § 1692j - § 812]
Civil liability [15 USC § 1692k - § 813]
Administrative enforcement [15 USC § 1692l - § 814]
Reports to Congress by the Bureau [15 USC § 1692m - § 815]
Relation to State laws [15 USC § 1692n - § 816]
Exemption for State regulation [15 USC § 1692o - § 817]
Exception for certain bad check enforcement programs [15 USC § 1692p - § 818]
Effective date [15 USC § 1692 - § 819]

Short Title [15 USC § 1601 note - § 801]


This title may be cited as the “Fair Debt Collection Practices Act.”

Congressional findings and declaration of purpose [15 USC § 1692 - § 802]


(a) Abusive practices


There is abundant evidence of the use of abusive, deceptive, and unfair debt collection practices by many debt collectors. Abusive debt collection practices contribute to the number of personal bankruptcies, to marital instability, to the loss of jobs, and to invasions of individual privacy.

(b) Inadequacy of laws


Existing laws and procedures for redressing these injuries are inadequate to protect consumers.

(c) Available non-abusive collection methods


Means other than misrepresentation or other abusive debt collection practices are available for the effective collection of debts.

(d) Interstate commerce


Abusive debt collection practices are carried on to a substantial extent in interstate commerce and through means and instrumentalities of such commerce. Even where abusive debt collection practices are purely intrastate in character, they nevertheless directly affect interstate commerce.

(e) Purposes


It is the purpose of this title to eliminate abusive debt collection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses.

Definitions [15 USC § 1692a - § 803]


As used in this title—

(1) The term “Bureau” means the Bureau of Consumer Financial Protection.

(2) The term “communication” means the conveying of information regarding a debt directly or indirectly to any person through any medium.

(3) The term “consumer” means any natural person obligated or allegedly obligated to pay any debt.

(4) The term “creditor” means any person who offers or extends credit creating a debt or to whom a debt is owed, but such term does not include any person to the extent that he receives an assignment or transfer of a debt in default solely for the purpose of facilitating collection of such debt for another.

(5) The term “debt” means any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance or services which are the subject of the transaction are primarily for personal, family, or household purposes, whether or not such obligation has been reduced to judgment.

(6) The term “debt collector” means any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another. Notwithstanding the exclusion provided by clause (F) of the last sentence of this paragraph, the term includes any creditor who, in the process of collecting his own debts, uses any name other than his own which would indicate that a third person is collecting or attempting to collect such debts. For the purpose of section 808(6), such term also includes any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the enforcement of security interests. The term does not include—

(A) any officer or employee of a creditor while, in the name of the creditor, collecting debts for such creditor;

(B) any person while acting as a debt collector for another person, both of whom are related by common ownership or affiliated by corporate control, if the person acting as a debt collector does so only for persons to whom it is so related or affiliated and if the principal business of such person is not the collection of debts;

(C) any officer or employee of the United States or any State to the extent that collecting or attempting to collect any debt is in the performance of his official duties;

(D) any person while serving or attempting to serve legal process on any other person in connection with the judicial enforcement of any debt;

(E) any nonprofit organization which, at the request of consumers, performs bona fide consumer credit counseling and assists consumers in the liquidation of their debts by receiving payments from such consumers and distributing such amounts to creditors; and

(F) any person collecting or attempting to collect any debt owed or due or asserted to be owed or due another to the extent such activity

(i) is incidental to a bona fide fiduciary obligation or a bona fide escrow arrangement;

(ii) concerns a debt which was originated by such person;

(iii) concerns a debt which was not in default at the time it was obtained by such person; or

(iv) concerns a debt obtained by such person as a secured party in a commercial credit transaction involving the creditor.

(7) The term “location information” means a consumer’s place of abode and his telephone number at such place, or his place of employment.

(8) The term “State” means any State, territory, or possession of the United States, the District of Columbia, the Commonwealth of Puerto Rico, or any political subdivision of any of the foregoing.

Acquisition of location information [15 USC § 1692b - § 804]


Any debt collector communicating with any person other than the consumer for the purpose of acquiring location information about the consumer shall—

(1) identify himself, state that he is confirming or correcting location information concerning the consumer, and, only if expressly requested, identify his employer;

(2) not state that such consumer owes any debt;

(3) not communicate with any such person more than once unless requested to do so by such person or unless the debt collector reasonably believes that the earlier response of such person is erroneous or incomplete and that such person now has correct or complete location information;

(4) not communicate by post card;

(5) not use any language or symbol on any envelope or in the contents of any communication effected by the mails or telegram that indicates that the debt collector is in the debt collection business or that the communication relates to the collection of a debt; and

(6) after the debt collector knows the consumer is represented by an attorney with regard to the subject debt and has knowledge of, or can readily ascertain, such attorney’s name and address, not communicate with any person other than that attorney, unless the attorney fails to respond within a reasonable period of time to the communication from the debt collector.

Communication in connection with debt collection [15 USC § 1692c - § 805]


(a) Communication with the consumer generally


Without the prior consent of the consumer given directly to the debt collector or the express permission of a court of competent jurisdiction, a debt collector may not communicate with a consumer in connection with the collection of any debt—

(1) at any unusual time or place or a time or place known or which should be known to be inconvenient to the consumer. In the absence of knowledge of circumstances to the contrary, a debt collector shall assume that the convenient time for communicating with a consumer is after 8 o’clock antimeridian and before 9 o’clock postmeridian, local time at the consumer’s location;

(2) if the debt collector knows the consumer is represented by an attorney with respect to such debt and has knowledge of, or can readily ascertain, such attorney’s name and address, unless the attorney fails to respond within a reasonable period of time to a communication from the debt collector or unless the attorney consents to direct communication with the consumer; or

(3) at the consumer’s place of employment if the debt collector knows or has reason to know that the consumer’s employer prohibits the consumer from receiving such communication.

(b) Communication with third parties


Except as provided in section 804, without the prior consent of the consumer given directly to the debt collector, or the express permission of a court of competent jurisdiction, or as reasonably necessary to effectuate a postjudgment judicial remedy, a debt collector may not communicate, in connection with the collection of any debt, with any person other than a consumer, his attorney, a consumer reporting agency if otherwise permitted by law, the creditor, the attorney of the creditor, or the attorney of the debt collector.

(c) Ceasing communication


If a consumer notifies a debt collector in writing that the consumer refuses to pay a debt or that the consumer wishes the debt collector to cease further communication with the consumer, the debt collector shall not communicate further with the consumer with respect to such debt, except—

(1) to advise the consumer that the debt collector’s further efforts are being terminated;

(2) to notify the consumer that the debt collector or creditor may invoke specified remedies which are ordinarily invoked by such debt collector or creditor; or

(3) where applicable, to notify the consumer that the debt collector or creditor intends to invoke a specified remedy. If such notice from the consumer is made by mail, notification shall be complete upon receipt.

(d) “Consumer” defined


For the purpose of this section, the term “consumer” includes the consumer’s spouse, parent (if the consumer is a minor), guardian, executor, or administrator.

Harassment or abuse [15 USC § 1692d - § 806]


A debt collector may not engage in any conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt. Without limiting the general application of the foregoing, the following conduct is a violation of this section:

(1) The use or threat of use of violence or other criminal means to harm the physical person, reputation, or property of any person.

(2) The use of obscene or profane language or language the natural consequence of which is to abuse the hearer or reader.

(3) The publication of a list of consumers who allegedly refuse to pay debts, except to a consumer reporting agency or to persons meeting the requirements of section 603(f) or 604(3)1 of this Act. Section 604(3) has been renumbered as Section 604(a)(3).

(4) The advertisement for sale of any debt to coerce payment of the debt.

(5) Causing a telephone to ring or engaging any person in telephone conversation repeatedly or continuously with intent to annoy, abuse, or harass any person at the called number.

(6) Except as provided in section 804, the placement of telephone calls without meaningful disclosure of the caller’s identity.

False or misleading representations [15 USC § 1692e - § 807]


A debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt. Without limiting the general application of the foregoing, the following conduct is a violation of this section:

(1) The false representation or implication that the debt collector is vouched for, bonded by, or affiliated with the United States or any State, including the use of any badge, uniform, or facsimile thereof.

(2) The false representation of—

(A) the character, amount, or legal status of any debt; or

(B) any services rendered or compensation which may be lawfully received by any debt collector for the collection of a debt.

(3) The false representation or implication that any individual is an attorney or that any communication is from an attorney.

(4) The representation or implication that nonpayment of any debt will result in the arrest or imprisonment of any person or the seizure, garnishment, attachment, or sale of any property or wages of any person unless such action is lawful and the debt collector or creditor intends to take such action.

(5) The threat to take any action that cannot legally be taken or that is not intended to be taken.

(6) The false representation or implication that a sale, referral, or other transfer of any interest in a debt shall cause the consumer to—

(A) lose any claim or defense to payment of the debt; or

(B) become subject to any practice prohibited by this title.

(7) The false representation or implication that the consumer committed any crime or other conduct in order to disgrace the consumer.

(8) Communicating or threatening to communicate to any person credit information which is known or which should be known to be false, including the failure to communicate that a disputed debt is disputed.

(9) The use or distribution of any written communication which simulates or is falsely represented to be a document authorized, issued, or approved by any court, official, or agency of the United States or any State, or which creates a false impression as to its source, authorization, or approval.

(10) The use of any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a consumer.

(11) The failure to disclose in the initial written communication with the consumer and, in addition, if the initial communication with the consumer is oral, in that initial oral communication, that the debt collector is attempting to collect a debt and that any information obtained will be used for that purpose, and the failure to disclose in subsequent communications that the communication is from a debt collector, except that this paragraph shall not apply to a formal pleading made in connection with a legal action.

(12) The false representation or implication that accounts have been turned over to innocent purchasers for value.

(13) The false representation or implication that documents are legal process.

(14) The use of any business, company, or organization name other than the true name of the debt collector’s business, company, or organization.

(15) The false representation or implication that documents are not legal process forms or do not require action by the consumer.

(16) The false representation or implication that a debt collector operates or is employed by a consumer reporting agency as defined by section 603(f) of this Act.

Unfair practices [15 USC § 1692f - § 808]


A debt collector may not use unfair or unconscionable means to collect or attempt to collect any debt. Without limiting the general application of the foregoing, the following conduct is a violation of this section:

(1) The collection of any amount (including any interest, fee, charge, or expense incidental to the principal obligation) unless such amount is expressly authorized by the agreement creating the debt or permitted by law.

(2) The acceptance by a debt collector from any person of a check or other payment instrument postdated by more than five days unless such person is notified in writing of the debt collector’s intent to deposit such check or instrument not more than ten nor less than three business days prior to such deposit.

(3) The solicitation by a debt collector of any postdated check or other postdated payment instrument for the purpose of threatening or instituting criminal prosecution.

(4) Depositing or threatening to deposit any postdated check or other postdated payment instrument prior to the date on such check or instrument.

(5) Causing charges to be made to any person for communications by concealment of the true propose of the communication. Such charges include, but are not limited to, collect telephone calls and telegram fees.

(6) Taking or threatening to take any nonjudicial action to effect dispossession or disablement of property if—

(A) there is no present right to possession of the property claimed as collateral through an enforceable security interest;

(B) there is no present intention to take possession of the property; or

(C) the property is exempt by law from such dispossession or disablement.

(7) Communicating with a consumer regarding a debt by post card.

(8) Using any language or symbol, other than the debt collector’s address, on any envelope when communicating with a consumer by use of the mails or by telegram, except that a debt collector may use his business name if such name does not indicate that he is in the debt collection business.

Validation of debts [15 USC § 1692g - § 809]


(a) Notice of debt; contents


Within five days after the initial communication with a consumer in connection with the collection of any debt, a debt collector shall, unless the following information is contained in the initial communication or the consumer has paid the debt, send the consumer a written notice containing—

(1) the amount of the debt;

(2) the name of the creditor to whom the debt is owed;

(3) a statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector;

(4) a statement that if the consumer notifies the debt collector in writing within the thirty-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector; and

(5) a statement that, upon the consumer’s written request within the thirty-day period, the debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor.

(b) Disputed debts


If the consumer notifies the debt collector in writing within the thirty-day period described in subsection (a) that the debt, or any portion thereof, is disputed, or that the consumer requests the name and address of the original creditor, the debt collector shall cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt or any copy of a judgment, or the name and address of the original creditor, and a copy of such verification or judgment, or name and address of the original creditor, is mailed to the consumer by the debt collector. Collection activities and communications that do not otherwise violate this title may continue during the 30-day period referred to in subsection (a) unless the consumer has notified the debt collector in writing that the debt, or any portion of the debt, is disputed or that the consumer requests the name and address of the original creditor. Any collection activities and communication during the 30-day period may not overshadow or be inconsistent with the disclosure of the consumer’s right to dispute the debt or request the name and address of the original creditor.

(c) Admission of liability


The failure of a consumer to dispute the validity of a debt under this section may not be construed by any court as an admission of liability by the consumer.

(d) Legal pleadings


A communication in the form of a formal pleading in a civil action shall not be treated as an initial communication for purposes of subsection (a).

(e) Notice provisions


The sending or delivery of any form or notice which does not relate to the collection of a debt and is expressly required by the Internal Revenue Code of 1986, title V of Gramm-Leach-Bliley Act, or any provision of Federal or State law relating to notice of data security breach or privacy, or any regulation prescribed under any such provision of law, shall not be treated as an initial communication in connection with debt collection for purposes of this section.

Multiple debts [15 USC § 1692h - § 810]


If any consumer owes multiple debts and makes any single payment to any debt collector with respect to such debts, such debt collector may not apply such payment to any debt which is disputed by the consumer and, where applicable, shall apply such payment in accordance with the consumer’s directions.

Legal actions by debt collectors [15 USC § 1692i - § 811]


(a) Venue


Any debt collector who brings any legal action on a debt against any consumer shall—

(1) in the case of an action to enforce an interest in real property securing the consumer’s obligation, bring such action only in a judicial district or similar legal entity in which such real property is located; or (2) in the case of an action not described in paragraph (1), bring such action only in the judicial district or similar legal entity—

(A) in which such consumer signed the contract sued upon; or

(B) in which such consumer resides at the commencement of the action.

(b) Authorization of actions


Nothing in this title shall be construed to authorize the bringing of legal actions by debt collectors.

Furnishing certain deceptive forms [15 USC § 1692j - § 812]


(a) It is unlawful to design, compile, and furnish any form knowing that such form would be used to create the false belief in a consumer that a person other than the creditor of such consumer is participating in the collection of or in an attempt to collect a debt such consumer allegedly owes such creditor, when in fact such person is not so participating.

(b) Any person who violates this section shall be liable to the same extent and in the same manner as a debt collector is liable under section 813 for failure to comply with a provision of this title.

Civil liability [15 USC § 1692k - § 813]


(a) Amount of damages


Except as otherwise provided by this section, any debt collector who fails to comply with any provision of this title with respect to any person is liable to such person in an amount equal to the sum of—

(1) any actual damage sustained by such person as a result of such failure;

(2) (A) in the case of any action by an individual, such additional damages as the court may allow, but not exceeding $1,000; or

(B) in the case of a class action,

(i) such amount for each named plaintiff as could be recovered under subparagraph (A), and

(ii) such amount as the court may allow for all other class members, without regard to a minimum individual recovery, not to exceed the lesser of $500,000 or 1 per centum of the net worth of the debt collector; and

(3) in the case of any successful action to enforce the foregoing liability, the costs of the action, together with a reasonable attorney’s fee as determined by the court. On a finding by the court that an action under this section was brought in bad faith and for the purpose of harassment, the court may award to the defendant attorney’s fees reasonable in relation to the work expended and costs.

(b) Factors considered by court


In determining the amount of liability in any action under subsection (a), the court shall consider, among other
relevant factors—

(1) in any individual action under subsection (a)(2)(A), the frequency and persistence of noncompliance by the debt collector, the nature of such noncompliance, and the extent to which such noncompliance was intentional; or

(2) in any class action under subsection (a)(2)(B), the frequency and persistence of noncompliance by the debt collector, the nature of such noncompliance, the resources of the debt collector, the number of persons adversely affected, and the extent to which the debt collector’s noncompliance was intentional.

(c) Intent


A debt collector may not be held liable in any action brought under this title if the debt collector shows by a preponderance of evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid any such error.

(d) Jurisdiction


An action to enforce any liability created by this title may be brought in any appropriate United States district court without regard to the amount in controversy, or in any other court of competent jurisdiction, within one year from the date on which the violation occurs.

(e) Advisory opinions of Bureau


No provision of this section imposing any liability shall apply to any act done or omitted in good faith in conformity with any advisory opinion of the Bureau, notwithstanding that after such act or omission has occurred, such opinion is amended, rescinded, or determined by judicial or other authority to be invalid for any reason.

Administrative enforcement [15 USC § 1692l - § 814]


(a) Federal Trade Commission


The Federal Trade Commission shall be authorized to enforce compliance with this subchapter, except to the extent that enforcement of the requirements imposed under this subchapter is specifically committed to another Government agency under any of paragraphs (1) through (5) of subsection (b), subject to subtitle B of the Consumer Financial Protection Act of 2010 [12 U.S.C. 5511 et seq.]. For purpose of the exercise by the Federal Trade Commission of its functions and powers under the Federal Trade Commission Act (15 U.S.C. 41 et seq.), a violation of this subchapter shall be deemed an unfair or deceptive act or practice in violation of that Act. All of the functions and powers of the Federal Trade Commission under the Federal Trade Commission Act are available to the Federal Trade Commission to enforce compliance by any person with this subchapter, irrespective of whether that person is engaged in commerce or meets any other jurisdictional tests under the Federal Trade Commission Act, including the power to enforce the provisions of this subchapter, in the same manner as if the violation had been a violation of a Federal Trade Commission trade regulation rule.

(b) Applicable provisions of law


Subject to subtitle B of the Consumer Financial Protection Act of 2010, compliance with any requirements imposed under this subchapter shall be enforced under—

(1) section 8 of the Federal Deposit Insurance Act [12 U.S.C. 1818], by the appropriate Federal banking agency, as defined in section 3(q) of the Federal Deposit Insurance Act (12 U.S.C. 1813(q)), with respect to—

(A) national banks, Federal savings associations, and Federal branches and Federal agencies of foreign banks;

(B) member banks of the Federal Reserve System (other than national banks), branches and agencies of foreign banks (other than Federal branches, Federal agencies, and insured State branches of foreign banks), commercial lending companies owned or controlled by foreign banks, and organizations operating under section 25 or 25A of the Federal Reserve Act [12 U.S.C. 601 et seq., 611 et seq.]; and

(C) banks and State savings associations insured by the Federal Deposit Insurance Corporation (other than members of the Federal Reserve System), and insured State branches of foreign banks;

(2) the Federal Credit Union Act [12 U.S.C. 1751 et seq.], by the Administrator of the National Credit Union Administration with respect to any Federal credit union;

(3) subtitle IV of title 49, by the Secretary of Transportation, with respect to all carriers subject to the jurisdiction of the Surface Transportation Board;

(4) part A of subtitle VII of title 49, by the Secretary of Transportation with respect to any air carrier or any foreign air carrier subject to that part;

(5) the Packers and Stockyards Act, 1921 [7 U.S.C. 181 et seq.] (except as provided in section 406 of that Act [7 U.S.C. 226, 227]), by the Secretary of Agriculture with respect to any activities subject to that Act; and

(6) subtitle E of the Consumer Financial Protection Act of 2010 [12 U.S.C. 5561 et seq.], by the Bureau, with respect to any person subject to this subchapter. The terms used in paragraph (1) that are not defined in this subchapter or otherwise defined in section 3(s) of the Federal Deposit Insurance Act (12 U.S.C. 1813(s)) shall have the meaning given to them in section 1(b) of the International Banking Act of 1978 (12 U.S.C. 3101).

(c) Agency powers


For the purpose of the exercise by any agency referred to in subsection (b) of this section of its powers under any Act referred to in that subsection, a violation of any requirement imposed under this subchapter shall be deemed to be a violation of a requirement imposed under that Act. In addition to its powers under any provision of law specifically referred to in subsection (b) of this section, each of the agencies referred to in that subsection may exercise, for the purpose of enforcing compliance with any requirement imposed under this subchapter any other authority conferred on it by law, except as provided in subsection (d) of this section.

(d) Rules and regulations


Except as provided in section 1029(a) of the Consumer Financial Protection Act of 2010 [12 U.S.C. 5519(a)], the Bureau may prescribe rules with respect to the collection of debts by debt collectors, as defined in this subchapter.

Reports to Congress by the Bureau [15 USC § 1692m - § 815]


(a) Not later than one year after the effective date of this title and at one-year intervals thereafter, the Bureau shall make reports to the Congress concerning the administration of its functions under this title, including such recommendations as the Bureau deems necessary or appropriate. In addition, each report of the Bureau shall include its assessment of the extent to which compliance with this title is being achieved and a summary of the enforcement actions taken by the Bureau under section 814 of this title.

(b) In the exercise of its functions under this title, the Bureau may obtain upon request the views of any other Federal agency which exercises enforcement functions under section 814 of this title.

Relation to State laws [15 USC § 1692n - § 816]


This title does not annul, alter, or affect, or exempt any person subject to the provisions of this title from complying with the laws of any State with respect to debt collection practices, except to the extent that those laws are inconsistent with any provision of this title, and then only to the extent of the inconsistency. For purposes of this section, a State law is not inconsistent with this title if the protection such law affords any consumer is greater than the protection provided by this title.

Exemption for State regulation [15 USC § 1692o § 817]


The Bureau shall by regulation exempt from the requirements of this title any class of debt collection practices within any State if the Bureau determines that under the law of that State that class of debt collection practices is subject to requirements substantially similar to those imposed by this title, and that there is adequate provision for enforcement.

Exception for certain bad check enforcement programs [15 USC § 1692p - § 818]


(a) In general


(1) Treatment of certain private entities Subject to paragraph (2), a private entity shall be excluded from the definition of a debt collector, pursuant to the exception provided in section 803(6), with respect to the operation by the entity of a program described in paragraph (2)(A) under a contract described in paragraph (2)(B).

(2) Conditions of applicability Paragraph (1) shall apply if—

(A) a State or district attorney establishes, within the jurisdiction of such State or district attorney and with respect to alleged bad check violations that do not involve a check described in subsection (b), a pretrial diversion program for alleged bad check offenders who agree to participate voluntarily in such program to avoid criminal prosecution;

(B) a private entity, that is subject to an administrative support services contract with a State or district
attorney and operates under the direction, supervision, and control of such State or district attorney, operates the pretrial diversion program described in subparagraph (A); and

(C) in the course of performing duties delegated to it by a State or district attorney under the contract, the private entity referred to in subparagraph (B)—

(i) complies with the penal laws of the State;

(ii) conforms with the terms of the contract and directives of the State or district attorney;

(iii) does not exercise independent prosecutorial discretion;

(iv) contacts any alleged offender referred to in subparagraph (A) for purposes of participating in a program referred to in such paragraph—

(I) only as a result of any determination by the State or district attorney that probable cause of a bad check violation under State penal law exists, and that contact with the alleged offender for purposes of participation in the program is appropriate; and

(II) the alleged offender has failed to pay the bad check after demand for payment, pursuant to State law, is made for payment of the check amount;

(v) includes as part of an initial written communication with an alleged offender a clear and conspicuous statement that—

(I) the alleged offender may dispute the validity of any alleged bad check violation;

(II) where the alleged offender knows, or has reasonable cause to believe, that the alleged bad check violation is the result of theft or forgery of the check, identity theft, or other fraud that is not the result of the conduct of the alleged offender, the alleged offender may file a crime report with the appropriate law enforcement agency; and

(III) if the alleged offender notifies the private entity or the district attorney in writing, not later than 30 days after being contacted for the first time pursuant to clause (iv), that there is a dispute pursuant to this subsection, before further restitution efforts are pursued, the district attorney or an employee of the district attorney authorized to make such a determination makes a determination that there is probable cause to believe that a crime has been committed; and

(vi) charges only fees in connection with services under the contract that have been authorized by the contract with the State or district attorney.

(b) Certain checks excluded


A check is described in this subsection if the check involves, or is subsequently found to involve—

(1) a postdated check presented in connection with a payday loan, or other similar transaction, where the payee of the check knew that the issuer had insufficient funds at the time the check was made, drawn, or delivered;

(2) a stop payment order where the issuer acted in good faith and with reasonable cause in stopping payment on the check;

(3) a check dishonored because of an adjustment to the issuer’s account by the financial institution holding such account without providing notice to the person at the time the check was made, drawn, or delivered;

(4) a check for partial payment of a debt where the payee had previously accepted partial payment for such debt;

(5) a check issued by a person who was not competent, or was not of legal age, to enter into a legal contractual obligation at the time the check was made, drawn, or delivered; or

(6) a check issued to pay an obligation arising from a transaction that was illegal in the jurisdiction of the State or district attorney at the time the check was made, drawn, or delivered.

(c) Definitions


For purposes of this section, the following definitions shall apply:

(1) State or district attorney

The term “State or district attorney” means the chief elected or appointed prosecuting attorney in a district, county (as defined in section 2 of title 1, United States Code), municipality, or comparable jurisdiction, including State attorneys general who act as chief elected or appointed prosecuting attorneys in a district, county (as so defined), municipality or comparable jurisdiction, who may be referred to by a variety of titles such as district attorneys, prosecuting attorneys, commonwealth’s attorneys, solicitors, county attorneys, and state’s attorneys, and who are responsible for the prosecution of State crimes and violations of jurisdiction-specific local ordinances.

(2) Check

The term “check” has the same meaning as in section 3(6) of the Check Clearing for the 21st Century Act.

(3) Bad check violation

The term “bad check violation” means a violation of the applicable State criminal law relating to the writing of dishonored checks.

Effective date [15 USC § 1692 note - § 819]


This title takes effect upon the expiration of six months after the date of its enactment, but section 809 shall apply only with respect to debts for which the initial attempt to collect occurs after such effective date.

The Bankruptcy Code's Automatic Stay


Automatic stay [11 USC § 362(a),(k)]


(a) Except as provided in subsection (b) of this section, a petition filed under section 301, 302, or 303 of this title, or an application filed under section 5(a)(3) of the Securities Investor Protection Act of 1970, operates as a stay, applicable to all entities, of—

(1) the commencement or continuation, including the issuance or employment of process, of a judicial, administrative, or other action or proceeding against the debtor that was or could have been commenced before the commencement of the case under this title, or to recover a claim against the debtor that arose before the commencement of the case under this title;

(2) the enforcement, against the debtor or against property of the estate, of a judgment obtained before the commencement of the case under this title;

(3) any act to obtain possession of property of the estate or of property from the estate or to exercise control over property of the estate;

(4) any act to create, perfect, or enforce any lien against property of the estate;

(5) any act to create, perfect, or enforce against property of the debtor any lien to the extent that such lien secures a claim that arose before the commencement of the case under this title;

(6) any act to collect, assess, or recover a claim against the debtor that arose before the commencement of the case under this title;

(7) the setoff of any debt owing to the debtor that arose before the commencement of the case under this title against any claim against the debtor; and

(8) the commencement or continuation of a proceeding before the United States Tax Court concerning a tax liability of a debtor that is a corporation for a taxable period the bankruptcy court may determine or concerning the tax liability of a debtor who is an individual for a taxable period ending before the date of the order for relief under this title.

(k) (1) Except as provided in paragraph (2), an individual injured by any willful violation of a stay provided by this section shall recover actual damages, including costs and attorneys’ fees, and, in appropriate circumstances, may recover punitive damages.

(2) If such violation is based on an action taken by an entity in the good faith belief that subsection (h) applies to the debtor, the recovery under paragraph (1) of this subsection against such entity shall be limited to actual damages.

The Bankruptcy Code's Discharge Injunction


Effect of discharge [11 USC § 524(a)]

(a) A discharge in a case under this title—

(1) voids any judgment at any time obtained, to the extent that such judgment is a determination of the personal liability of the debtor with respect to any debt discharged under section 727, 944, 1141, 1228, or 1328 of this title, whether or not discharge of such debt is waived;

(2) operates as an injunction against the commencement or continuation of an action, the employment of process, or an act, to collect, recover or offset any such debt as a personal liability of the debtor, whether or not discharge of such debt is waived; and

(3) operates as an injunction against the commencement or continuation of an action, the employment of process, or an act, to collect or recover from, or offset against, property of the debtor of the kind specified in section 541 (a)(2) of this title that is acquired after the commencement of the case, on account of any allowable community claim, except a community claim that is excepted from discharge under section 523, 1228 (a)(1), or 1328 (a)(1), or that would be so excepted, determined in accordance with the provisions of sections 523 (c) and 523 (d) of this title, in a case concerning the debtor’s spouse commenced on the date of the filing of the petition in the case concerning the debtor, whether or not discharge of the debt based on such community claim is waived.

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