Can Creditors Collect Debt After I’ve Been Discharged From Bankruptcy?
Receiving a discharge from bankruptcy means that you are discharged from your obligation to pay the debts that existed at the date of bankruptcy. This means that creditors cannot legally pursue collection of them. However, as with most rules, there are exceptions. The main exceptions are:
- Fines, penalties and restitution orders imposed by Court.
- Court awarded damages for intentionally inflicted bodily harm, sexual assault or wrongful death resulting therefrom.
- Debts or liabilities arising out of fraud, embezzlement, misappropriation or defalcation.
- Debts or liabilities resulting from obtaining property or services by false pretences or fraudulent misrepresentation. Note that this may include Employment Insurance overpayments.
- Debts or liabilities for alimony, maintenance, spousal support or child support.
- Student loans are only discharged with a bankruptcy if I have not been a full or part-time student at any time in the 7 years prior to filing for bankruptcy.
If you have any of these debts, the creditor can continue collection activity after you are discharged or, they could seek Court approval to pursue collection while you are still in bankruptcy. It is important to discuss any debts that you think might fall in these exceptions with your Trustee prior to filing.
In addition to the foregoing debts, secured debts for assets held as collateral that you chose to keep, will survive your discharge. For example, if you chose to keep your financed home and/or vehicle, you will be responsible for the debt secured by those assets.
When you receive your bankruptcy discharge papers we strongly recommend that you keep these documents in case a creditor or collection agency attempts to collect a debt that has been discharged in bankruptcy. These documents can also be helpful if you need to have errors on your credit report corrected.
Powell Associates Ltd. is a Licensed Insolvency Trustee (LIT) focused on providing debt settlement, proposal and bankruptcy solutions for individuals and businesses. We offer free consultations to review your personal financial situation and practical debt resolution options. Contact us to discuss your situation over the phone or book an appointment to meet us face-to-face in Saint John, Moncton, Fredericton, Charlottetown or Dartmouth - it's your choice.