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  • Robert Weed

Bankruptcy, the automatic stay and debt collector NCO.

Tuesday, I saw a press release from NCO, one of the largest of the debt collection companies.   While many businesses are slow to add jobs in a recession, NCO is hiring 400 more people for its Rockford IL “Customer Management Contact Center.”  Apparently debt collection is now a growth industry in America.

That same day I got an email from one of my clients, Victor (not his real name).  Victor got called Tuesday by Mr. Balakrishnan of NCO, who wanted to “update his information.”  Victor told Mr. Balakrishnan, “I’ve filed bankruptcy, I don’t want to talk to you.”  Mr. Balakrishnan replied, “I have a very good offer for the settlement of this debt.”

Victor told the debt collector, “you are violating the bankruptcy court order.”  The debt collector replied, “this call is being recorded” and hung up.

I’m glad to know the call was being recorded, because we will ask NCO to produce it when we go in front of the bankruptcy judge for this violation of the “automatic stay.”

The automatic stay is a court order that takes effect automatically when you file bankruptcy.  The stay tells your creditors they have to leave you alone while your case is going on.  (That usually about three months and two weeks.)  Creditors who know about the bankruptcy and still try to collect a debt can be punished by the judge.  The judge can award “punitive damages” to you.  In other words, fine them and give you the fine.

Written notice is not required.  Even if NCO lost the first notice from the bankruptcy court–which was mailed to them on May 19–they violated the stay as soon as Victor told them he filed bankruptcy and they didn’t apologize and hang up.

This call from NCO to “update their records” says to me that they didn’t lose the notice–they knew about the bankruptcy when they called.  They wanted to ask for a payment without exactly asking.  That won’t stand up in court.

We’re seeing this a lot.  A debt collector will call about a debt and is told about the bankruptcy.  Instead of saying, sorry, the collector makes some excuse.

Maybe the collectors records aren’t right; anybody can make a mistake.  But “oops, sorry, my mistake” is what they should say when they are told.  If the collector says “your lawyer filed the wrong bankruptcy” or “you can’t file bankruptcy on us” or “we have a good offer”–we sue.

One of the purposes of bankruptcy is to get relief from the pressure of those phone calls.  We don’t let debt collectors try to dodge around the law.

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