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Capital One Illegally Sues New Jersey Woman for Discharged Debt

Bankruptcy is intended to give people a chance at a fresh start. Indeed, a successful Chapter 7 bankruptcy will discharge nearly all unsecured debt – including credit card debt.

Unfortunately, it appears that at least one credit card company is not playing by the rules.

Capital One Financial Corp. sued a New Jersey woman after she had completed her Chapter 7 bankruptcy case. The company wanted her to pay $4,266 for credit card debt that had been properly discharged in bankruptcy. Ultimately, the woman was able to get Capital One’s suit dismissed, but only after filing a separate lawsuit against the company.

Sadly, even though the practice is illegal, the woman was not the first person to be sued by Capital One after a bankruptcy discharge. A court investigation revealed that the credit card company had made 15,500 “erroneous claims” in which they asked former debtors for money that was not legally recoverable.

To date, more than 800 borrowers in similar situations have taken legal action against Capital One.

Don’t Tolerate Collection Abuse

Debt collection is a major source of revenue for credit card companies. Many of them rely on the fact that borrowers will be too scared to challenge illegal or unfair debt collection practices.

Some debt collectors take advantage of bankruptcy filers. Capital One’s habit of suing for discharged credit card debt is only one example. Other companies have been known to illegally report discharged debt to credit bureaus in an attempt to pressure borrowers into paying. The list of violations goes on and on.

Borrowers, especially those in bankruptcy, need to understand that they have rights. Harassment, collection abuse and other illegal practices should not be tolerated. People who are being pursued by debt collectors should talk to an experienced bankruptcy and collections attorney who can help them understand their rights.

Source: Wall Street Journal, “Debts Go Bad, Then it Gets Worse,” Jessica Silver-Greenberg, Dec. 23, 2011

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