Can a collection agency take legal action after bankruptcy?

 When individuals file for bankruptcy, one of the primary goals is to obtain relief from overwhelming debts. However, many people wonder whether a debt collection agency can take legal action against them after their bankruptcy has been discharged. Understanding this process is crucial for anyone dealing with debt and bankruptcy.

Once a bankruptcy case is filed, an automatic stay is put into effect. This legal provision prohibits creditors, including debt collection agencies, from pursuing collection actions against the debtor. This means that during the bankruptcy proceedings, they cannot initiate lawsuits, garnish wages, or make collection calls.

After bankruptcy is discharged, the situation becomes a bit more complex. In general, debts that were included in the bankruptcy filing are typically wiped out, meaning that the debtor is no longer legally obligated to pay them. Consequently, a debt collection agency cannot take legal action to recover those debts. If a creditor or collection agency attempts to collect on a discharged debt, it may be considered a violation of the bankruptcy laws, and the debtor could potentially file a complaint against them.

However, it’s essential to recognize that not all debts are dischargeable in bankruptcy. Certain obligations, such as student loans, child support, and some tax debts, may survive bankruptcy. In these cases, a debt collection agency can take legal action if these non-dischargeable debts are not paid.

Additionally, if a debtor incurs new debts after bankruptcy, collection agencies may also pursue those debts since they are not covered by the bankruptcy discharge.

In conclusion, while a debt collection agency cannot take legal action on discharged debts following bankruptcy, they can pursue non-dischargeable debts or any new debts incurred afterward. It’s always advisable for individuals to consult with a bankruptcy attorney to understand their rights and obligations fully, ensuring that they are protected from unlawful collection practices after bankruptcy.

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