Debtors are required by the bankruptcy court to list all creditors and debts owed on their schedules upon filing their bankruptcy petition. This can often seem overwhelming and confusion to our clients, especially when a delinquent account listed on their petition has been sold to one, or possibly more, collection agencies. What happens when your delinquent account is sold? Are you required to list each collection agency or just the original creditor?
After several months of unsuccessful collection attempts, creditors often “charge off” outstanding balances. In other words, the debt is declared a business loss by the original creditor. Once the debt has been charged off, the creditor normally pursues one of two routes: (1) the outstanding balance is assigned to a collection agency that will collect the debt on the original creditor’s behalf; or (2) the original creditor sells the debt for pennies on the dollar to a collection agency which then has the right to collect what is owed on the balance, plus their fees and interest.
Because it is possible for debts to be shuffled from one collection agency to another, The Sasser Law Firm pulls each client’s credit reports to ensure all creditors are listed. Listing the original creditor is good, but listing all known collection agencies known is better. Failure to list the name of current collection agencies does not mean that the debt will not be discharged upon successful completion of your bankruptcy case. If after filing for bankruptcy an omitted collection agency contacts you about a debt included in your petition, contact The Sasser Law Firm and we will immediately contact the collection agency to notify them of your bankruptcy filing and case number.
If you are interested in viewing your credit report, www.annualcreditreport.com allows individuals to obtain one free credit report every year from Experian, Transunion and Equifax. Click here to obtain your free credit report.