A bankruptcy discharge releases the debtor from liability for debts included in the bankruptcy. A discharge permanently prevents creditors from attempting to collect any portion of the discharged debts, including using collection letters, collection phone calls, filing a lawsuit, or any other communications with the debtor.
Although the bankruptcy discharge releases debtors from personal liability for debts, many collection agencies, banks, finance companies, or other creditors continue to try to collect those amounts even though the debt is extinguished.
The bankruptcy discharge constitutes a permanent statutory injunction prohibiting creditors from taking any action, including filing a lawsuit, designed to collect a discharged debt.
If a creditor or collection agency attempts collection efforts on a discharged debt, the debtor has a variety of legal remedies. Collection attempts of discharged debt may violate the North Carolina Debt Collection Act, the North Carolina Collection Agency Act, or the Fair Debt Collection Practices Act. These provisions allow for statutory penalties and attorneys’ fees and costs.
Collection agencies or creditors determined to have violated the North Carolina Debt Collection Act and the North Carolina Collection Agency Act can be assessed statutory penalties ranging from $500 to $4,000 per violation.